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What is the amount of capacity or volume variance

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Reference no: EM132668995

UTEX Company has presented to you the following production data. Sales price per yard is P100.00.

                                                2018           2019      2020

Units sold (in yard)          24,000       24,500      26 000

Units produced (in yard)    25,000      24,500      27,000

Standard manufacturing cost per yard:

Variable Cost

Direct Materials P24.00

Direct Labor 16.00

Factory overhead 10.00

Fixed Factory Overhead 15.00

During 2019, the company did not report any capacity variance. Selling, general and administrative expenses vary at the rate of P2.00 per unit while the fixed portion is determined to be P60,000 per annum.

There was no work-in-process inventory on hand at January 1, 2018 - December 31, 2020. Finished goods inventories are maintained on a first-in-first out basis. Ignore income tax in the computation.

Problem 1: What is the net Income (loss) under variable costing in 2018?

a. P772,500

b. P724,500

c. P748,500

d. P724,000

Problem 2: If the company classifies direct materials as a throughput cost, what is the net income (loss) under throughput costing in 2020?

a. P820,500

b. P794,500

c. P748,500

d. P724,500

Problem 3: What is the amount of capacity or volume variance under variable costing in 2020?

a. P7,500- fav

b. P0

c. P7,500- unf.

d. P 500- fav

Reference no: EM132668995

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