Answered: What is the adjusted net income under…

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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ABC Corp manufactures several lines of skiing equipment. Its Canada plant makes a single model, the GENOCIDE-25 ski. The following data are available for 2013: Sales is 38,000 units at P 70 per unit; production is 39,000 units; Standard manufacturing variable cost is P 15 per unit; standard fixed overhead cost is P 25 per unit. The selling and administrative expenses are as follows: Fixed cost totaled P 600,000 and variable cost per unit is P 8.00. ABC Corp use normal activity and budgeted fixed cost of P 2,000,000. Fifty percent of the budgeted fixed cost pertains to manufacturing cost and this is used to set its standard manufacturing fixed cost per unit. There were no beginning inventories. What is the adjusted net income under the standard absorption costing?

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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