Answered: Stan Corp uses standard absorption…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 15P

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Question

Stan Corp uses standard absorption costing, basing its standard fixed cost on 300,000 units of product per year and P 450,000 semi-annual budgeted fixed manufacturing overhead cost. Standard variable manufacturing cost is P 12.00 for two units. Results of 2013 are as follows: Unit production is 290,000 units; units sales at P 20.00 per unit totaled 270,000 units; actual variable manufacturing cost is P 1.715,000; actual fixed manufacturing cost is P 910,000; actual fixed selling expense is P 300,000 and actual variable selling and admin expense is P 500,000. There were no beginning inventories. Compute the net income under variable costing.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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