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    VARIABLE COSTING Exercises

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    Sophia Locre
    The document contains two exercises on variable costing. The first asks to prepare income statements using absorption and variable costing methods for a stained glass company making lamps, assuming production volumes of 1,000, 1,250, and 1,500 lamps. The second asks to prepare income statements using both costing methods for years 2019 and 2020 for a company that produced different volumes but sold the same amount each year.

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    VARIABLE COSTING Exercises

    Uploaded by

    Sophia Locre
    5 views1 page
    The document contains two exercises on variable costing. The first asks to prepare income statements using absorption and variable costing methods for a stained glass company making lamps, assuming production volumes of 1,000, 1,250, and 1,500 lamps. The second asks to prepare income statements using both costing methods for years 2019 and 2020 for a company that produced different volumes but sold the same amount each year.

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    The document contains two exercises on variable costing. The first asks to prepare income statements using absorption and variable costing methods for a stained glass company making lamps, assuming production volumes of 1,000, 1,250, and 1,500 lamps. The second asks to prepare income statements using both costing methods for years 2019 and 2020 for a company that produced different volumes but sold the same amount each year.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    5 views1 page

    VARIABLE COSTING Exercises

    Uploaded by

    Sophia Locre
    The document contains two exercises on variable costing. The first asks to prepare income statements using absorption and variable costing methods for a stained glass company making lamps, assuming production volumes of 1,000, 1,250, and 1,500 lamps. The second asks to prepare income statements using both costing methods for years 2019 and 2020 for a company that produced different volumes but sold the same amount each year.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
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    VARIABLE COSTING Exercises

    1. A company makes stained glass lamps. Each lamp that it sells for P210 per unit requires
    P12 of direct materials and P48 of direct labor. Fixed overhead costs are expected to be
    P135,000 per year. The company expects to sell 1,000 lamps during the coming year.
    Selling and administrative expenses were zero.
    Required:
    Income statement using both absorption costing and variable costing methods
    assuming that the company makes 1,000, 1,250, and 1,500 lamps during the year.

    2. A company pays its production managers a bonus based on the company’s profitability.
    During the two most recent years, the company maintained the same cost structure to
    manufacture the products.

    Year Units Produced Units Sold


    2019 4,000 4,000
    2020 6,000 4,000

    Cost Data:

    Direct Materials P12/unit


    Direct Labor P16/unit
    Variable Overhead P8/unit
    Fixed Overhead P72,000
    Variable Selling & Admin. Expense P6/unit
    Fixed Selling & Admin. Expense P40,000

    The company sells its products for P75/unit.

    Required:

    Prepare an income statement based on absorption and variable costing for years 2019
    and 2020.

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