The following data relate to Hunter, Inc., a new
company:
Planned and actual production
200,000 units
Sales at P48 per unit
170,000 units
Manufacturing costs:
Variable
P18 per unit
Fixed
P840,000
Selling and administrative costs:
Variable
P7 per unit
Fixed
P925,000
There were no variances during the period.
Required:
Determine the number of units in the ending finished-goods
inventory.
Calculate the cost of the ending finished-goods inventory under (1)
variable costing and (2) absorption costing.
Determine the company's variable-costing net income.
Determine the company's absorption-costing net income.
1.
number of units in the ending finished-goods inventory = 200000 - 170000 = 30000 units
2.
cost of the ending finished-goods inventory under:
(1) variable costing = 30000 * 18 = P540,000
(2) absorption costing = Variable + fixed manufacturing cost for 30000 units = 30000*18 + (840000/200000*30000) = P666,000
3.
company's variable-costing net income = Sales - costs
= (170000*48) - (170000*18) - 840000 - (170000*7) - 925000
= P2,145,000
4.
company's absorption-costing net income = (170000*48) - (170000*18) - (840000/200000*170000) - (170000*7) - 925000 = P2,271,000
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