1. ValarMorghulis Company was organized just a year ago. The normal capacity and actual production of the company is 2,500 units. The results of the company’s first year of operations are shown below. ValarMorghulis Company

Income Statement

Sales (2,000 units sold)

P 135,000

Less: Cost of goods sold:

Beginning Inventory

P 0

Cost of Goods Manufactured


Goods Available for Sale

P 105,000

Ending Inventory



Gross Margin


Less: Selling and Administrative expenses


Net Income

P 9,000

The company’s unit variable cost is computed as follows:

Variable manufacturing cost

P 32

Variable Selling and Administrative expenses


Total Variable cost per unit

P 37


1. What is the Selling price per unit? Fixed MOH per unit application?

2. What is the total fixed manufacturing cost? Total fixed selling and administrative expense?

3. What the net income under full costing? Under direct costing?

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