Answered: VXY Corporation has the following…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 14EA: Cool Pool has these costs associated with production of 20,000 units of accessory products: direct...

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Question

VXY Corporation has the following standard costs associated with the manufacture and sale of one of its products:

Direct material P 3.00 per unit

Direct labor. P 2.50 per unit

Variable manufacturing overhead. P 2.00 per unit

Fixed manufacturing overhead. P 4.00 per unit (based on an estimate of 50,000 units per year)

Variable selling expenses. P 0.25 per unit

Fixed SG&A expense P 75,000 per year

During 2021, its first year of operations, VXY manufactured 51,000 units and sold 48,000. The selling price per unit was P25. All costs were equal to standard.

1. The volume variance under absorptoon costing is.

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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Follow-up Question

Refer to Gjerty Corporation. Under absorption costing, the standard
production cost per unit for the current year was
a. P11.30.
b. P 7.30.
c. P11.55.
d. P13.05.

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