# ValarMorghulis Company was organized just a year ago. The normal capacity and actual…

ValarMorghulis Company was organized just a year ago. The normal capacity and actual production of the company is 2,500 units. The results of the company’s first year of operations are shown below. ValarMorghulis Company
Income Statement Sales (2,000 units sold) P 135,000 Less: Cost of goods sold: Beginning Inventory P 0 Cost of Goods Manufactured 105,000 Goods Available for Sale P 105,000 Ending Inventory 21,000 84,000 Gross Margin 51,000 Less: Selling and Administrative expenses 42,000 Net Income P 9,000
The company’s unit variable cost is computed as follows: Variable manufacturing cost P 32 Variable Selling and Administrative expenses 5 Total Variable cost per unit P 37
REQUIRED: What is the Selling price per unit? Fixed MOH per unit application? What is the total fixed manufacturing cost? Total fixed selling and administrative expense? What the net income under full costing? Under direct costing? Prepare the income statement under absorption and variable costing. During its first year of operations, Sugar Ray Company produced 55,000 jars of hand cream based on a formula containing 10 percent glycolic acid. Unit sales were 53,500 jars. Fixed overhead was applied at P0.50 per unit produced. Fixed overhead was underapplied by P10,000. This fixed overhead variance was closed to Cost of Goods Sold. There was no variable overhead variance. The results of the year’s- operations are as follows (on an absorption costing basis): [round off to two decimal place the per unit cost] Sales (53,500 units @ P8.50) P 454,750 Less: Cost of Goods Sold (170,500) Gross Margin P 284,250 Less: Selling and Administrative (all fixed) (120,000) Net Income P 164,250
REQUIRED: Give the cost of the firm’s ending inventory under absorption costing. What is the cost of the ending inventory under variable costing? Compute the income under variable costing. Reconcile the difference between the two income figures.
3. For the year ended December 31, 2017, SIRA Inc. incurred the following costs on Job Order 201 for manufacturing of 750 units: [round up to 2 decimal place]
Original cost accumulation:
Direct Materials 1,250,000
Direct Labor 750,000