Assignment

ABC Company produces products that sells for P160. Selected data for the company’s operations last
year follow:

Beginning inventory 5,000 units

Normal capacity 55,000 units
Variable costs per unit:
Direct materials P25
Direct labor 40
Manufacturing overhead 45
Selling and administrative 10
Fixed costs per unit
Manufacturing overhead 20
Selling and administrative 15
The fixed selling and administrative expenses are also based on normal capacity.
Requirements:
Determine the operating income under absorption costing and variable costing methods assuming the
following independent cases:
Production units Sales units
1. 55,000 58,000
2. 55,000 53,000
3. 55,000 55,000
4. 58,000 45,000
5. 53,000 57,000