Question

The following data relate to Hunter, Inc., a new company: Planned and actual production 200,000 units...

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.

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Homework Answers

Answer #1

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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