1 Absorption Variable

Direct Materials ₱ 15 ₱ 15
Direct Labor 5 5
Variable MOH 2 2
Fixed MOH ₱ 20
Unit Product Cost ₱ 42 ₱ 22

2 Absorption Costing - Income Statement

Sales (units) 9000

Sales (P) ₱ 60 ₱ 540,000
Cost of Sales ₱ 42 - 378,000
Gross Profit 162,000
Operating Expenses
Variable ₱ 4 - 36,000
Fixed - 70,000
Operating Income ₱ 56,000

3 Variable Costing - Marginal Income Statement

Sales (units) 9000

Sales (P) ₱ 540,000
Cost of sales, variable ₱ 22 - 198,000
Manufacturing margin 342,000
Operating expenses, variable ₱ 4 - 36,000
Contribution margin 306,000
Fixed cost
Manufacturing OH - 200,000
Operating - 70,000
Operating Income ₱ 36,000

4 Reconcilliation
Variable Costing Net Income ₱ 36,000
Fixed OH, Beginning ₱ -
Fixed OH, Ending ₱ 20,000
Absorption Costing Net Income ₱ 56,000
5 Y1 Y2
Cost of Goods Manufactured 48,000 48,000
Divide: Unit Produced 8,000 8,000
Unit Product Cost 6 6

6 Variable Costing - Marginal Income Statement Y1 Y2

Sales (U) 7000 9000
Sales (P) @ P10 ₱ 70,000 ₱ 90,000
Less: Cost of sales, variable @ P6 ₱ 42,000 ₱ 54,000
Manufacturing margin ₱ 28,000 ₱ 36,000
Operating expenses, variable @ P3 -₱ 21,000 -₱ 27,000
Contribution margin ₱ 7,000 ₱ 9,000
Fixed cost
Factory OH -₱ 16,000 -₱ 16,000
Operating -₱ 4,000 -₱ 4,000
Operating Income -₱ 13,000 -₱ 11,000

Absorption Costing - Income Statement Y1 Y2

Sales (units) 7000 9000
Sales (P) ₱ 70,000 ₱ 90,000
Cost of Sales -₱ 56,000 -₱ 72,000
Gross Profit ₱ 14,000 ₱ 18,000
Operating Expenses
Variable -₱ 21,000 -₱ 27,000
Fixed -₱ 4,000 -₱ 4,000
Operating Income -₱ 11,000 -₱ 13,000

7 Reconcilliation Y1 Y2
Variable Costing Net Income -₱ 13,000 -₱ 11,000
Fixed OH, Beginning ₱ - -₱ 2,000
 Fixed OH, Ending -₱ 2,000 ₱ -
Absorption Costing Net Income -₱ 11,000 -₱ 13,000

8 Variable Costing - Marginal Income Statement

Sales ₱ 127,400
Less: Variable Expenses
Variable Cost of Sales
Beginning Inventory ₱ 6,400
Variable Mfg. Cost ₱ 115,200
Goods Available for Sale ₱ 121,600
Ending Inventory ₱ 32,000
Variable Cost of Sales ₱ 89,600
Variable selling and admin ₱ 9,800 ₱ 99,400
Contribution Margin ₱ 28,000
Less:Fixed Cost
Fixed MOH ₱ 14,400
Fixed selling and admin ₱ 7,000 ₱ 21,400
Net Operating Income ₱ 6,600

9 Absorption Costing - Income Statement

Sales ₱ 127,400
Cost of Sales
Beginning Inventory ₱ 7,200
Cost of Goods Manufacture ₱ 129,600
Goods Available for Sale ₱ 136,800
Ending Inventory -₱ 36,000 ₱ 100,800
Gross Profit ₱ 26,600
Less:Selling and Admin Expenses
Variable selling and admin ₱ 9,800
Fixed selling and admin ₱ 7,000 ₱ 16,800
Net Operating Income ₱ 9,800

10 Reconcilliation
Variable Costing Net Income ₱ 6,600
Fixed MOH Ending ₱ 4,000
Fixed MOH Beginning -₱ 800
Absorsorption Costing Net Income ₱ 9,800