QUIZ
I. MULTIPLE CHOICE
Encircle the letter of the correct answer. (5 items x 2 points)
1. The primary difference between variable costing and absorption costing is the treatment of:
d. Fixed manufacturing overhead
2. When is the net income under absorption costing higher than net income under variable costing?
a. Units produced exceed units sold
3. Which cost is charged to the product under variable costing?
c. Variable selling expenses
4. Which of the following is NOT charged to a product under absorption costing?
d. Fixed administrative expenses
5. Which is TRUE when units sold exceed unit produced?
b. The net income under absorption costing is lower than the net income under variable costing.
II. PROBLEM SOLVING
Read and analyze the following problem. Write your answer at at the back of this paper. Show your
computations. (3 items x 10 points)
June Company’s actual data for 201A are given as follows:
Units produced 25,000
Units sold 24,000
Selling price per unit P200
Direct material costs 30
Direct labor 20
Variable manufacturing overhead 60
Variable selling costs 20
Fixed manufacturing costs P600,000
Fixed administrative costs 300,000
Required:
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Prepare an income statement under (1) absorption costing, (2) variable costing, and (3) throughput
costing.
Solving:
Absorption Costing
Sales (24,000 x P200) 4,800,000
Less: Cost of Goods Sold (24,000 x P84) 2,016,000
Gross Profit 2,784,000
Less: Selling and Administrative Expenses
Variable selling (24,000 x P20) 480,000
Fixed Administration 300,000 780,000
Net Income ₱ 2,004,000
Variable Cost
Sales (24,000 x P200) 4,800,000
Less: Variable Cost
Cost of Goods (24,000 x P60) 1,440,000
Selling Costs (24,000 x P20) 480,000 1,920,000
Contribution Margin 2,880,000
Less: Fixed Cost
Manufacturing costs 600,000
Administrative costs 300,000 900,000
Net Income ₱ 1,980,00
Throughput Costing
Sales (24,000 x P200) 4,800,000
Less; Direct Materials (24,000 x P30) 720,000
Throughput Margin 4,080,000
Less:
Variable Manufacturing costs (25,000 x P30) 750,000
Variable Selling Expenses (24,000 x P20) 480,000
Fixed Manufacturing costs 600,000
Fixed Administrative costs 300,000 2,130,000
Net Income ₱ 1,950,000
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