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Problem I:
The following are the number of units produced and the corresponding total production costs for six (6)
months of X Company:
Month Units Produced Production Costs
April 500 P 4,000.00
May 700 8,000.00
June 900 6,000.00
July 600 7,500.00
August 800 8,500.00
September 550 7,250.00
Based on the given information, and using the least-squares regression method, answer the following
(show your solution):
1. Variable cost production cost per unit.
2. Monthly fixed production cost per unit.
3. Supposed in October of the same year, 1,100 units were produced. Assuming that the relationship
between cost elements is still valid or within the relevant range. Determine the Total production
cost in October.
Problem II:
The following is the 2nd Quarter Income Statement of Y Corporation, which produces one single product:
Sales P 100,000.00
Cost of Sales 45,000.00
Gross Profit P 55,000.00
Operating Expenses 25,000.00
Net Income P 30,000.00
The cost of sales is a mixed cost. The fixed cost is P 15,000.00. The selling price is P125.00/unit. The
contribution margin ratio is 55% of the total sales. The operating expenses are composed of variable
selling expenses and fixed administrative expenses amounting to P10,000.00 and P15,000.00,
respectively.
Problem III:
The following information pertains to X Company’s two (2) products:
Product A Product B
Break-even point in units 360 240
Selling price per unit P4,500.00 P 14,250.00
Variable cost per unit P2,250.00 P5,000.00
Sales mix ratio 60% 40%
1. Determine the product cost per unit under variable costing method.
2. Determine the product cost per unit under absorption costing method.