Variable Costing

Direct Material 1200

Direct Labor 1400
Variable Overhead 500
unit cost 3100php

Sales (8000 X5000 ) 40,000,000

Less : Variable Cost(8000x3100) (24,800,000)
Manufacturing Margin 15,200,000
Less : Variable selling and admin.(8000x200) (1,600,000)
Contribution Margin 13,600,000
Less : fixed costs (6,000,000+4,000,000) (10,000,000)
Income 3,600,000

Absorption method
Variable Production Costs P 3100
Fixed Overhead 6,000,000/10,000 600
Total unit cost P 3700

Sales (5000x8000) P 40,000,000

Less COGS (8000x3700) (29,600,000)
Gross Income P 10,400,000
Less: Selling and Admin. Expense ( 4,000,000)
Income 6,400,0000

Net Income, Absorption Costing 6,400,000

Add : Fixed Overhead in beg. Inventory 0
Total 6,400,000
Less : Fixed Overhead in End. Inventory (2,800,000)
Net Income,Variable Costing 3,600,000