PROBLEM 1

The following information is available for JAGUAR Company for its first year of operations:

Sales in units 5,000

Production in units 8,000
Manufacturing costs:
Direct labor P3 per unit
Direct material 5 per unit
Variable overhead 1 per unit
Fixed overhead P100,000
Net income (absorption method) P30,000
Sales price per unit P40

How much is the difference between JAGUAR Corporation's income under absorption costing and under
variable costing?

PROBLEM 2

The following information has been extracted from the financial records of ROAR Corporation for its first
year of operations:

Units produced 10,000

Units sold 7,000
Variable costs per unit:
Direct material P8
Direct labor 9
Manufacturing overhead 3
SG&A 4
Fixed costs:
Manufacturing overhead P70,000
SG&A 30,000

How much is the difference between ROAR Corporation's income under absorption costing and under
variable costing?