The VArfull Company presented the following data for 2007 and 2008 Standard costs per unit Direct materials P13.00 Direct Labor 10.00 Variable factory overhead 2.00 Variable cost per unit 25.00 Production and Sales-Unit 2007 Production 17,000 2007 Sales 14,000 2008 production 14,000 2008 sales 16,000 There was no 2007 inventory beginning. The expected normal production each year is 15,000 units. Total Fixed manufacturing overhead each year are P120,000. Units produced are expected to be sold at P45.00 each. Fixed selling and administrative expenses are budgeted at P65,000 yearly while variable selling and administrative expenses are expected to be 10% of sales REQUIRED: 1. Prepare income statements for the years ended December 31, 2007 and 2008 under a. Direct Costing Method b. Absorption Costing Method 2. Reconcile the difference in net income for 2007 and 2008 and the two years as a whole.

The VArfull Company presented the following data for 2007 and 2008 Standard costs per unit Direct materials P13.00 Direct Labor 10.00 Variable factory overhead 2.00 Variable cost per unit 25.00 Production and Sales-Unit 2007 Production 17,000 2007 Sales 14,000 2008 production 14,000 2008 sales 16,000 There was no 2007 inventory beginning. The expected normal production each year is 15,000 units. Total Fixed manufacturing overhead each year are P120,000. Units produced are expected to be sold at P45.00 each. Fixed selling and administrative expenses are budgeted at P65,000 yearly while variable selling and administrative expenses are expected to be 10% of sales REQUIRED: 1. Prepare income statements for the years ended December 31, 2007 and 2008 under a. Direct Costing Method b. Absorption Costing Method 2. Reconcile the difference in net income for 2007 and 2008 and the two years as a whole.

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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