Reference no: EM133176740

Question 1 - Buttercup Corp. had sales of 75,000 units and production of 100,000 units during its first year of operation. Other information for the year included:

Direct Labor P187,500

Variable manufacturing overhead P100,000

Direct Materials P150,000

Variable selling expenses P120,000

Fixed administrative expenses P130,000

Fixed manufacturing overhead P200,000

There was no beginning and ending work-in process inventory.

Required -

1. Compute the per unit cost under each of the following methods:

a. Variable Costing

b. Absorption Costing

2. Compute the cost of goods manufactured and the cost of goods sold using the different costing methods.

3. Compute the value of the ending finished goods inventory under the different costing methods.

Question 2 - Totoro Corp. uses the absorption costing method. The company's budgeted fixed overhead was determined to be at P500,000 with a normal capacity of P50,000 units. The net income, units produced and sold during the company's first three period of operation follows:

Required -

1. Using the reconciliation approach, determine the net income of the company if it was using the variable costing method.

2. Assuming that the company was using variable costing instead of absorption costing, compute the net income of the company under the absorption costing method for the three periods presented.