Name: Dia Mae A.

Generoso
Schedule: MWF 1:00 – 4:00 pm
QUIZ #4
1.
Requirement a.

Absorption Costing Variable Costing

Direct materials P 75,000 P 100,000 P 75,000 P 100,000
Direct labor 250,000 400,000 250,000 400,000
Variable overhead 20,000 24,000 20,000 24,000
Fixed overhead 50,000 40,000 - -
Total P 395,000 P 564,000 P 345,000 P 524,000

Requirement b.
Jacob Company
Income Statement
Variable Costing
Women’s Men’s wallet Total
wallet
Sales P 495,000 P 945,000 P 1,440,000
Less: Variable Expense
Variable cost of goods sold P 345,000 524,000 P 869,000
Manufacturing margin 150,000 421,000 571,000
Less: Variable expenses 30,000 60,000 90,000
Contribution margin P 120,000 P 361,000 P 481,000
Less: Fixed Expenses
Fixed overhead P 50,000 P 40,000 P 90,000
Fixed selling 35,000 40,000 75,000
Total P 85,000 P 80,000 P 165,000
Net Income P 35,000 P 281,000 P 316,000

Requirement c
Jacob Company
Income Statement
Variable Costing
Women’s Men’s wallet Total
wallet
Sales P 495,000 P 945,000 P 1,440,000
Less: Cost of goods sold
Inventory beginning - 10,000 -
Cost of goods manufactured 550,000 900,000 1,450,000
Total available P 550,000 P 910,000 P 1,450,000
Less: cost of goods sold 395,000 564,000 959,000
Total P 155,000 P 346,000 P 501,000
Gross profit P 340,000 P 599,000 P 939,000
Less: Operating expenses
Selling and administrative
Variable P 30,000 P 60,000 P 90,000
Fixed 25,000 25,000 50,000
Total 55,000 85,000 140,000
Net income P 285,000 P 514,000 P 799,000
 Requirement d: Segmented Income Statement
Jacob Company
Income Statement
Variable Costing
Women’s Men’s wallet Total
wallet
Sales P 495,000 P 945,000 P 1,440,000
Less: Variable Expense
Variable cost of goods sold P (345,000) (524,000) P (869,000)
Variable selling (30,000) (60,000) (90,000)
Contribution margin P 120,000 P 361,000 P 481,000
Less: Direct Fixed Expenses
Direct fixed overhead P ( 50,000) P ( 40,000) P (90,000)
Direct fixed selling (35,000) (40,000) (75,000)
Segment margin P 35,000 P 281,000 P 316,000
Less: Common fixed expenses
Common fixed overhead (40,000)
Common selling (50,000)
Net income (loss) P 226,000

2.
Requirement 1
Direct materials P8
Direct labor 10
Variable manufacturing overhead 2
Unit product cost P20

With this figure, the variable costing income statements can be prepared

Year 1 Year 2
Sales P 1,000,000 P 1,500,000
Less: variable expenses:
Variable cost of goods sold @P20 per unit 400,000 600,000
Variable selling and administrative @P3 per unit 60,000 90,000
Total variable expenses 460,000 690,000
Contribution margin 540,000 810,000
Less fixed expenses:
Fixed manufacturing overhead 350,000 350,000
Fixed selling and administrative 250,000 250,000
Total fixed expenses 600,000 600,000
Net operating income (loss) P (60,000) P 210,000

Requirement 2

Variable costing net operating income (loss) P (60,000) P 210,000

Add: Fixed manufacturing overhead cost deferred
in inventory under absorption costing (5k x P14) 70,000
Deduct: Fixed manufacturing overhead cost released
from inventory under absorption costing (5k x P 14) (70,000)
Absorption costing net operating income P 10,000 P 140,000