Scribd
Upload
62 views2 pages

Income Statements: Costing Methods Comparison

The document contains 3 income statements for Ace Corporation using different costing methods for the year ending December 31, 201A. The first statement uses absorption costing and shows a net income of P138,000. The second statement uses variable costing and shows a lower net income of P115,000 due to fixed overhead costs included in inventory. The third statement uses throughput costing and shows the lowest net income of P50,000 after deducting all fixed costs from throughput margin.

Uploaded by

garciajerico42
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
62 views2 pages

Income Statements: Costing Methods Comparison

The document contains 3 income statements for Ace Corporation using different costing methods for the year ending December 31, 201A. The first statement uses absorption costing and shows a net income of P138,000. The second statement uses variable costing and shows a lower net income of P115,000 due to fixed overhead costs included in inventory. The third statement uses throughput costing and shows the lowest net income of P50,000 after deducting all fixed costs from throughput margin.

Uploaded by

garciajerico42
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

1.

Income Statement under Absorption Costing

Ace Corporation
Income Statement (Absorption
Costing) December 31, 201A
Sales (19,000 x P150) P2,850,000
Less: Cost of Goods Sold (19,000 x 2,052,000
P108) Gross Profit 798,000
Less: Selling and Administrative
Costs Variable Selling (19,000 x P380,000
P20) Fixed administrative expenses 280,000 660,000
Net Income P138,000

Fixed manufacturing cost per unit = P460,000/20,000 = P23


Cost of goods sold per unit = P23 + P20 + P15 + P50 =
P108

2. Income Statement under Variable Costing

Ace Corporation
Income Statement (Variable
Costing) December 31, 201A
Sales (19,000 x P150) P2,850,000
Less: Variable Costs
Cost of Goods Sold (19,000 x P1,615,000
P85) Selling Costs (19,000 x P20) 380,000 1,995,000
Contribution Margin 855,000
Less: Fixed Costs
Manufacturing Costs 460,000
Administrative Costs 280,000 740,000
Net Income P115,000

To prove:
Fixed overhead in ending inventory = P23 x P1,000 units unsold =
P23,000 Difference in net income = P138,000 – P115,000 = P23,000

3. Income Statement under Throughput Costing

Ace Corporation
Income Statement (Throughput Costing)
December 31, 201A
Sales (19,000 x P150) P2,850,000
Less: Direct Materials (19,000 x P20) 380,000
Throughput Margin 2,470,000
Less:
Variable manufacturing costs
(20,000 x P65) P1,300,000
Variable Selling Costs (19,000 x 380,000
P20) Fixed Manufacturing Costs 460,000
Fixed Administrative Costs 280,000 P2,420,000
Net Income P50,000
05 Activity 1 Answer Key *Property of
STI Page 2 of 2

You might also like