Exercise 2 (Variable and Absorption Costing Unit Product Costs)Super Bicycle produces an inexpensive yet rugged bicycle for P5,000.Selected data for the company's operations last year follow:Units in beginning inventory...Units produced...Units sold. ..Units in ending inventory...ㅇ10,0008,0002,000Variable costs per unit:Direct materials..Direct labor ....Variable manufacturing overheadVariable selling and administrativeFixed costs:P1,2001,400500200Fixed manufacturing overhead...Fixed selling and administrative...P6,000,000P4,000,000Required:1. Assume that the company uses absorption costing. Compute the unitproduct cost for one bicycle.2. Assume that the company uses variable costing. Compute the unit productcost for one bicycle.

Variable cost includes all costs that vary directly with the volume of output. That is, variable…

Required: Assume that the company uses absorption costing. Compute the unt product cost for one bicycle. E. Assume that the company uses variable costing. Compute the unit product cost for one bicycle.

Required: Assume that the company uses absorption costing. Compute the unt product cost for one bicycle. E. Assume that the company uses variable costing. Compute the unit product cost for one bicycle.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question

Exercise 2 (Variable and Absorption Costing Unit Product Costs)
Super Bicycle produces an inexpensive yet rugged bicycle for P5,000.
Selected data for the company's operations last year follow:
Units in beginning inventory...
Units produced...
Units sold. ..
Units in ending inventory...
ㅇ
10,000
8,000
2,000
Variable costs per unit:
Direct materials..
Direct labor ....
Variable manufacturing overhead
Variable selling and administrative
Fixed costs:
P1,200
1,400
500
200
Fixed manufacturing overhead...
Fixed selling and administrative...
P6,000,000
P4,000,000
Required:
1. Assume that the company uses absorption costing. Compute the unit
product cost for one bicycle.
2. Assume that the company uses variable costing. Compute the unit product
cost for one bicycle.

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