Transcribed Image Text: Excrcise 3 (Variable Costing Unit Product Cost and Income Statement;

Transcribed Image Text: Excrcise 3 (Variable Costing Unit Product Cost and Income Statement;
Break-even)
PC Desk, Inc., makes an oak desk specially designed for personal computers.
The desk sells for P2,000. Data for last year’s operations follow:
Units in beginning inventory..
Units produced..
Units sold..
10,000
9,000
1,000
Units in ending inventory.
Variable costs per unit:
P 600
300
100
Direct materials.
Direct labor
Variable manufacturing overhead.
Variable selling and administrative
Total variable cost per unit. .
200
P1,200
Fixed costs:
Fixed manufacturing overhead
Fixed selling and administrative.
Total fixed costs…
P3,000,000
4,500,000
P7,500,000
Required:
1. Assume that the company uses variable costing. Compute the unit product
cost for one computer desk.
2. Assume that the company uses variable costing. Prepare an income
statement for the year using the contribution format.
3. What is the company’s break-even point in terms of units sold?

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