MAS1

ABSORPTION AND VARIABLE COSTING

Vicenio Corp. began its operations on January 1, 2013. It produce single product that
sells for 13.50 per unit. The company uses an actual (historical) cost system. During
2013, 150,000 units were produced and 135,000 units were sold. There was no
work-in process inventory at December 31, 2013.
Manufacturing cost and selling and administrative expense for 2013 were as
follows:
Fixed Cost
Raw Materials
produced
Direct Labor
Factory Overhead
Selling & administrative

Variable Cost

P195,000
140,000

P3.50 per unit

2.50 per unit produced
1.00 per unit produced
1.20 per unit sold

Requirements:
A. Determine inventory cost per unit under Absorption ad Variable Costing.
B. Prepare income statements under Absorption ad Variable Costing for 2013.
C. Determine the cost of ending inventory under the two costing method.
D. Provide reconciliation income under the two costing methods.