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Wu Equipment Inc. Manufactures and distributes industrial air compressors. The following costs are available for...

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Accounting

Wu Equipment Inc. Manufactures and distributes industrial air compressors. The following costs are available for the year ended December 31, 2020. The company has no beginning inventory. In 2020, the unit selling price was P 450. Costs and expenses were as follows:

Variable Cost per unit:

Direct Materials P 80

Direct labor 150

Variable manufacturing overhead 30

Variable selling & administrative expenses 20

Annual fixed costs and expenses:

Manufacturing overhead P120,000

Selling & administrative expenses 10,000

Normal Capacity1,500 units

Instructions: Assume the following conditions for three years

Production Sales

2020 1,500 1200

2021 1,700 1800

2022 1,400 1,400

(a) Compute the manufacturing costs of one unit of product using variable costing and absorption costing

(b)Prepare the income statement for Wu Company using variable costing and absorption costing for 2020, 2021, 2022

(c)Reconcile the net income under absorption costing and variable costing for the three year period.

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