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... 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.
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... 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Answer 1 and 2
Transcribed Image Text: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...
10,000
8,000
2,000
Units in ending inventory...
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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