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Required: 1. Prepare an income statement for each year in the contribution format using variable costing. Reconcile the absorption costing and variable costing net operating income figures for each year.

Required: 1. Prepare an income statement for each year in the contribution format using variable costing. Reconcile the absorption costing and variable costing net operating income figures for each year.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The company's P34 unit product cost is computed as follows: P 8 Direct materials . Direct labor.. Variable manufacturing overhead.. . Fixed manufacturing overhead (P350,000 + 25,000 units) .. Unit product cost... 10 14 P34 Production and cost data for the two years are given below: Year 1 Year 2 Units produced .. Units sold... 25,000 20,000 25,000 30,000 Required: 1. Prepare an income statement for each year in the contribution format using variable costing. Reconcile the absorption costing and variable costing net operating income figures for each year. 2.
Transcribed Image Text:The company's P34 unit product cost is computed as follows: P 8 Direct materials . Direct labor.. Variable manufacturing overhead.. . Fixed manufacturing overhead (P350,000 + 25,000 units) .. Unit product cost... 10 14 P34 Production and cost data for the two years are given below: Year 1 Year 2 Units produced .. Units sold... 25,000 20,000 25,000 30,000 Required: 1. Prepare an income statement for each year in the contribution format using variable costing. Reconcile the absorption costing and variable costing net operating income figures for each year. 2.
Problem 3 (Variable Costing Income Statement; Reconciliation) During Floppy Company's first two years of operations, the company reported net operating income as follows (absorption costing basis): Year 1 Year 2 P1,000,000 P1,500,000 Sales (at P50 per unit) Less cost of goods sold: Beginning inventory Add cost of goods manufactured (at P34 per unit) Goods available for sale Less ending inventory (at P34 per unit) Cost of goods sold Gross margin Less selling and administrative expenses* Net operating income 170,000 850,000 1,020,000 850,000 850,000 170,000 680,000 320,000 310,000 P 10.000 1,020,000 480,000 340,000 P 140,000 * P3 per unit variable; P250,000 fixed each year.
Transcribed Image Text:Problem 3 (Variable Costing Income Statement; Reconciliation) During Floppy Company's first two years of operations, the company reported net operating income as follows (absorption costing basis): Year 1 Year 2 P1,000,000 P1,500,000 Sales (at P50 per unit) Less cost of goods sold: Beginning inventory Add cost of goods manufactured (at P34 per unit) Goods available for sale Less ending inventory (at P34 per unit) Cost of goods sold Gross margin Less selling and administrative expenses* Net operating income 170,000 850,000 1,020,000 850,000 850,000 170,000 680,000 320,000 310,000 P 10.000 1,020,000 480,000 340,000 P 140,000 * P3 per unit variable; P250,000 fixed each year.
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