Reference no: EM132814596

Question -

Q1. Blake Company produces a single product. Last year, Blake's net operating income under absorption costing was P3,600 lower than under variable costing. The company sold 10,000 units during the year, and its variable costs were P9 per unit, of which P1 was variable selling expense. If production cost was P11 per unit under absorption costing, then how many units did the company produce during the year?

A) 8,200 units

B) 8,800 units

C) 11,200 units

D) 11,800 units

Q2. Pungent Corporation manufactures and sells a spice rack. Shown below are the actual operating results for the first two years of operations:

Year 1 Year 2

Units (spice racks) produced 40,000 40,000

Units (spice racks) sold 37,000 41,000

Absorption costing net operating income P44,000 P52,000

Variable costing net operating income P38,000 ???

Pungent's cost structure and selling price were the same for both years. What is Pungent's variable costing net operating income for Year 2?

A) P48,000

B) P50,000

C) P54,000

D) P56,000