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03 Product Costing KEY PDF
03 Product Costing KEY PDF
Answer Key
I TRUE OR FALSE
1 TRUE 11 FALSE 21 FALSE
2 TRUE 12 TRUE 22 TRUE
3 FALSE 13 FALSE 23 TRUE
4 TRUE 14 TRUE 24 FALSE
5 TRUE 15 TRUE 25 FALSE
6 FALSE 16 TRUE
7 TRUE 17 FALSE
8 FALSE 18 TRUE
9 FALSE 19 FALSE
10 TRUE 20 TRUE
1 D 11 B 21 A
2 D 12 B 22 D
3 A 13 C 23 A
4 C 14 A 24 B
5 D 15 B 25 D
6 B 16 C
7 D 17 C
8 A 18 A
9 B 19 D
10 A 20 C
Production
10 D P17 & P16 under 40,000 under 50,000
variable cost per unit 12.00 12.00
fixed cost per unit
at 40,000 = P200,000 / 40,000 5.00
at 50,000 = P200,000 / 50,000 4.00
total cost per unit 17.00 16.00
Production
13 A P390,000 & P390,000 under 40,000 under 50,000
Sales 40,000 units 1,200,000.00 1,200,000.00
variable costs: Cost of sales 480,000.00 480,000.00
Selling & administrative 80,000.00 80,000.00
560,000.00 560,000.00
contribution margin 640,000.00 640,000.00
less, Fixed expenses Manufacturing 200,000.00 200,000.00
Selling & administrative 50,000.00 50,000.00
total expenses 250,000.00 250,000.00
net income 390,000.00 390,000.00
14 A refer to number 12
15 B Note There was no inventory at January 1, 2007.
P200 decrease Variable costing (P6 x 100 ) 600.00
Absorption costing ( P8 x 100) 800.00
difference (200.00)
3.5
Sales 2,000,000.00
Less, Variable costs:
Cost of sales [P1,500,000 - (250,000 x P3.00)] 750,000.00
Operating expenses 125,000.00 875,000.00
Contribution margin 1,125,000.00
Less, Fixed costs:
Manufacturing costs(P1,500,000 - P750,000) 750,000.00
Operating expenses 100,000.00 850,000.00
Net income 275,000.00
3.6 1 ABSORPTION COSTING METHOD
Sales 174,000.00
Less, Cost of sales
Direct materials 44,000.00
Direct labor 36,000.00
Factory overhead 56,000.00
Total manufacturing costs 136,000.00
Less, cost of inventory for 2,000 units
(P136,000 / 16,500) x 2,000 units 16,484.85 119,515.15
Gross Profit 54,484.85
Less, Variable
Operatingoperating
expensesexpenses:
Selling and marketing expenses 20,000.00
General & Administrative expenses 12,000.00 32,000.00
Net income 22,484.85
The difference is due to the treatment in the Fixed FOH. The full amount of P40,000 was charged to the
revenues under variable costing while only P35,151.52 (P40,000 /16,500 x 14,500) was charged to the
revenues under the absorption costing. (P40,000 - P35,151.52)
3.7 Variable Absorption
Costing Costing
Direct materials 3.00 3.00
Direct labor 2.00 2.00
Variable overhead 1.00 1.00
Fixed overhead (P30,000 /100,000) - 3.00
Total cost per unit 6.00 9.00
Ending inventory in units 25,000 25,000
1 Cost of ending inventory 150,000.00 225,000.00
Sales in units 75,000 75,000
2 Cost of sales 450,000.00 675,000.00
Sales 2,100,000.00 2,100,000.00
Less, Cost of sales 450,000.00 675,000.00
Fixed factory overhead 300,000.00 -
Selling & Administrative -variable 75,000.00 75,000.00
Selling & Administrative -fixed 160,000.00 160,000.00
Total 985,000.00 910,000.00
3 Net income 1,115,000.00 1,190,000.00
OR
Net income per Absorption costing 85,000.00 147,000.00
+ Fixed factory overhead in beg. Inventory
Y1 -
Y2 7000 x P2.50 17,500.00
- Fixed factory overhead in end. Inventory
Y1 7000 x P2.50 (17,500.00)
Y2 2000 x P3.00 (6,000.00)
Net income per Variable costing 67,500.00 158,500.00
3.10 1 Variable costing method Year 1 Year 2
Sales (14,000 @ P45) (16,000 @ P45) 630,000.00 720,000.00
Less Variable costs
Cost of goods sold
Beginning inventory, at std., P25 - 75,000.00
Current costs at std., at P25 425,000.00 350,000.00
Total 425,000.00 425,000.00
Ending inventory, at std. P25 75,000.00 25,000.00
Variable cost of goods sold 350,000.00 400,000.00
Variable selling and Adm., Expenses - -
Total Variable costs 350,000.00 400,000.00
Contribution Margin 280,000.00 320,000.00
3.12
Direct materials and direct labor 500,000.00
Factory overhead 100,000.00
Total Manufacturing costs 600,000.00
Units produced 1,000.00
Cost per unit 600.00
Ending finished goods in units 200.00
Cost of ending finished goods 120,000.00
3.13
No. 1 No. 2
Fixed manufacturing costs 44,000.00 -
Variable manufacturing costs 12,000.00 12,000.00
Direct materials 30,000.00 30,000.00
Direct labor 24,000.00 24,000.00
Total costs a 110,000.00 66,000.00
Units produced b 2,200 2,200
cost per unit ( a / b) c 50.00 30.00
Units of ending inventory d 300.00 300.00
cost of ending inventory (c x d) e 15,000.00 9,000.00
3.14
a Absorption costing
Sales 256,000.00
Less, cost of goods sold
Beginning inventory -
Current Production 160,000.00
Available for sale 160,000.00
Ending inventory 2,000 x P16 (32,000.00) 128,000.00
Gross Profit 128,000.00
Less Expenses 80,000.00
Net income 48,000.00
b Variable costing
Sales 256,000.00
Less, Cost of goods sold
Variable manufacturing costs 96,000.00
Less, Ending inventory 2,000 x P9.60 (19,200.00) 76,800.00
Contribution Margin 179,200.00
Less, Fixed costs:
Manufacturing costs 64,000.00
Selling & Administrative Expenses 80,000.00 144,000.00
Net income 35,200.00
OR
Net income per absorption costing 48,000.00
Fixed factory overhead in Ending inventory (P6.40 x 2,000) (12,800.00)
Net income per variable costing 35,200.00