Absorption vs. variable Costing 1. Last year X Company had sales of 75,000 units and of 100,000 units.

Other information for the year included: Direct manufacturing labor P187,500.00 Variable manufacturing overhead 100,000.00 Direct materials 150,000.00 Variable selling expenses 100,000.00 Fixed administrative expenses 100,000.00 Fixed manufacturing overhead 200,000.00 There was no beginning inventory. Required: a. Compute the ending finished goods inventory under both absorption and variable costing. b. Compute the COGS under both absorption and variable costing. 2. Sofia Company sells its products for P66.00 each. The current production level is 25,000 units, although only 20,000 units are anticipated to be sold. Unit manufacturing costs are: Direct materials Direct manufacturing labor Variable manufacturing costs Total manufacturing costs Marketing expenses

12.00 18.00 9.00 180.00 6.00/unit plus P60,000/year

Required: Prepare Income Statement using: a. Absorption costing b. Variable costing