Reference no: EM132633539

The Cords Company manufactures and sells basketball nets in custom colors. The income statement (absorption costing) for the month of December showed a gross profit of P60,000 and net income of P20,000. Selling and administrative expenses were 50% fixed. Two thousand nets in Miami Heat team colors were sold at an average price of P75.00 per unit. During the month, 400 nets in Chicago Bulls colors were manufactured but not sold. Cost of goods sold was 20% fixed and 80% variable (direct materials, direct labor and variable manufacturing overhead). Variable manufacturing costs are the same for all nets.

Required:

Problem 1. income statement for the month using variable costing.

Problem 2. income statement for the month using absorption costing.

Problem 3. Reconcile the net income under variable costing with the net income under absorption costing.