Solutionto

Absorption Costingand

Variable Costing

Ex. 7-1

a. Absorption Costing b. Variable Costing;Materials P 20 Materials P 20Labor 10 Labor 10Variable overhead 12 Variable overhead 12Fixed overhead 13Product Cost P 55 Product Cost P 42

Ex. 7-2. Computation of Product Coat per Unit:

D J .Selling price P 110 P 150Less contribution margin 60 80Variable Cost P 50 P 70 Less Var. selling & administrative cost 10 15Variable manufacturing cost or product cost under variable costing P 40 P 55Add fixed overhead 10 20Product cost under absorption costing P 50 P 75