MULTIPLE CHOICE (THEORIES)

1. CVP analysis can be used to study the effect of:

A. Changes in selling prices on a company's profitability.
B. Changes in variable costs on a company's profitability.
C. Changes in fixed costs on a company's profitability.
D. All of the choices

2. The break-even point is that level of activity where:

A. Total revenue equals total cost.
B. Variable cost equals fixed cost.
C. Total contribution margin equals the sum of variable cost plus fixed cost.
D. Sales revenue equals total variable cost.

3. The unit contribution margin is calculated as the difference between:

A. Selling price and fixed cost per unit.
B. Selling price and variable cost per unit.
C. Selling price and product cost per unit.
D. Fixed cost per unit and variable cost per unit.

4. Which of the following would produce the largest increase in the contribution margin per
unit?
A. A 7% increase in selling price.
B. A 15% decrease in selling price.
C. A 14% increase in variable cost.
D. A 17% decrease in fixed cost.

5. Which of the following would take place if a company were able to reduce its variable cost
per unit?
A. Contribution Margin: Increase; Break-even Point: Increase
B. Contribution Margin: Increase; Break-even Point: Decrease
C. Contribution Margin: Decrease; Break-even Point: Increase
D. Contribution Margin: Decrease; Break-even Point: Decrease

6. Assuming no change in sales volume, an increase in a firm's per-unit contribution margin

would:
A. Increase net income.
B. Decrease net income.
C. Have no effect on net income.
D. Increase fixed costs.

7. A company that desires to lower its break-even point should strive to:
A. Decrease selling prices.
B. Reduce variable costs.
C. Increase fixed costs.
 D. Sell more units.

8. The contribution-margin ratio is:

A. The difference between the selling price and the variable cost per unit.
B. Fixed cost per unit divided by variable cost per unit.
C. Variable cost per unit divided by the selling price.
D. Unit contribution margin divided by the selling price.

9. Which of the following expressions can be used to calculate the break-even point with the
contribution-margin ratio (CMR)?
A. CMR ÷ fixed costs
B. CMR x fixed costs
C. Fixed costs ÷ CMR
D. (Fixed costs + variable costs) x CMR

10. The difference between budgeted sales revenue and break-even sales revenue is the:
A. Contribution margin.
B. Contribution-margin ratio.
C. Safety margin.
D. Target net profit.

11. If a company desires to increase its safety margin, it should:

A. Increase fixed costs.
B. Decrease the contribution margin.
C. Decrease selling prices, assuming the price change will have no effect on demand.
D. Stimulate sales volume.

12. All other things being equal, a company that sells multiple products should attempt to
structure its sales mix so the greatest portion of the mix is composed of those products with
the highest:
A. Selling price.
B. Variable cost.
C. Contribution margin.
D. Fixed cost.

13. Cost-volume-profit analysis is based on certain general assumptions. Which of the following
is not one of these assumptions?
A. Product prices will remain constant as volume varies within the relevant range.
B. Costs can be categorized as fixed, variable, or semivariable.
C. The efficiency and productivity of the production process and workers will change
to reflect manufacturing advances.
D. Total fixed costs remain constant as activity changes.
14. The assumptions on which cost-volume-profit analysis is based appear to be most valid for
businesses:
A. Over the short run.
B. Over the long run.
C. Over both the short run and the long run.
D. In periods of sustained profits.

15. Which of the following calculations can be used to measure a company's degree of
operating leverage?
A. Contribution margin ÷ sales
B. Contribution margin ÷ net income
C. Sales ÷ contribution margin
D. Sales ÷ net income

16. The margin of safety ratio

A. Is computed as actual sales divided by break-even sales.
B. Indicates what percent decline in sales could be sustained before the company
would operate at a loss.
C. Measures the ratio of fixed costs to variable costs.
D. Is used to determine the break-even point.

17. A company with a higher contribution margin ratio is

A. More sensitive to changes in sales revenue.
B. Less sensitive to changes in sales revenue.
C. Either more or less sensitive to changes in sales revenue, depending on other factors.
D. Likely to have a lower breakeven point.

18. Only direct materials, direct labor, and variable manufacturing overhead costs are
considered product costs when using
A. Full costing
B. Absorption costing
C. Variable costing
D. Product costing

19. When a company assigns the costs of direct materials, direct labor, and both variable and
fixed manufacturing overhead to products, that company is using
A. Operations costing
B. Absorption costing
C. Variable costing
D. Product costing

20. Companies recognize fixed manufacturing overhead costs as period costs (expenses) when
incurred when using
A. Full costing
 B. Absorption costing
C. Product costing
D. Variable costing

MULTIPLE CHOICE (SHORT PROBLEMS)

1. Sanderson sells a single product for P50 that has a variable cost of P30. Fixed costs
amount to P5 per unit when anticipated sales targets are met. If the company sells one unit
in excess of its break-even volume, the bottom-line profit will be:
A. P15
B. P20
C. P50
D. An amount that cannot be derived based on the information presented.

2. At a volume of 15,000 units, Boston reported sales revenues of P600,000, variable costs of
P225,000, and fixed costs of P120,000. The company's contribution margin per unit is:
A. P17
B. P25
C. P47
D. P55

3. A recent income statement of Banks Corporation reported the following data: Sales revenue
P8,000,000; Variable costs P5,000,000; Fixed costs P2,200,000. If these data are based on
the sale of 20,000 units, the contribution margin per unit would be:
A. P 40
B. P150
C. P290
D. P360

4. A recent income statement of Fox Corporation reported the following data: Sales revenue
P3,600,000; Variable costs P1,600,000; Fixed costs P1,000,000. If these data are based on
the sale of 10,000 units, the break-even point would be:
A. 2,000 units
B. 2,778 units
C. 3,600 units
D. 5,000 units

5. A recent income statement of Yale Corporation reported the following data: Sales revenue
P2,500,000; Variable costs P1,500,000; Fixed costs P800,000. If these data are based on
the sale of 5,000 units, the break-even sales would be:
A. P 2,000,000
B. P 2,206,000
C. P 2,500,000
D. P10,000,000
6. Lawton, Inc., sells a single product for P12. Variable costs are P8 per unit and fixed costs
total P360,000 at a volume level of 60,000 units. Assuming that fixed costs do not change,
Lawton's break-even point would be:
A. 30,000 units
B. 45,000 units
C. 90,000 units
D. Negative because the company loses P2 on every unit sold.

7. Green, Inc., sells a single product for P20. Variable costs are P8 per unit and fixed costs
total P120,000 at a volume level of 5,000 units. Assuming that fixed costs do not change,
Green's break-even sales would be:
A. P160,000
B. P200,000
C. P300,000
D. P480,000

8. Orion recently reported sales revenues of P800,000, a total contribution margin of P300,000,
and fixed costs of P180,000. If sales volume amounted to 10,000 units, the company's
variable cost per unit must have been:
A. P12
B. P32
C. P50
D. P92

9. Strand has a break-even point of 120,000 units. If the firm's sole product sells for P40 and
fixed costs total P480,000, the variable cost per unit must be:
A. P 4
B. P36
C. P44
D. An amount that cannot be derived based on the information presented.

10. Ribco Co., makes and sells only one product. The unit contribution margin is P6 and the
break-even point in unit sales is 24,000. The company's fixed costs are:
A. P 4,000
B. P 14,400
C. P 40,000
D. P144,000

11. At a volume level of 500,000 units, Sullivan reported the following information: Sales price
P60; Variable cost per unit P20; Fixed cost per unit P4. The company's contribution-margin
ratio is:
A. 0.33
B. 0.40
 C. 0.60
D. 0.67

12. A recent income statement of Oslo Corporation reported the following data: Units sold 8,000;
Sales revenue P7,200,000; Variable costs P4,000,000; Fixed costs P1,600,000. If the
company desired to earn a target net profit of P480,000, it would have to sell:
A. 1,200 units
B. 2,800 units
C. 4,000 units
D. 5,200 units

13. Yellow, Inc., sells a single product for P10. Variable costs are P4 per unit and fixed costs
total P120,000 at a volume level of 10,000 units. What dollar sales level would Yellow have
to achieve to earn a target net profit of P240,000?
A. P400,000
B. P500,000
C. P600,000
D. P750,000

14. Maxie's budget for the upcoming year revealed the following figures: Sales revenue
P840,000; Contribution margin P504,000; Net income P54,000. If the company's break-even
sales total P750,000, Maxie's safety margin would be:
A. P90,000
B. P246,000
C. P336,000
D. P696,000

15. Dana sells a single product at P20 per unit. The firm's most recent income statement
revealed unit sales of 100,000, variable costs of P800,000, and fixed costs of P400,000. If a
P4 drop in selling price will boost unit sales volume by 20%, the company will experience:
A. No change in profit because a 20% drop in sales price is balanced by a 20% increase in
volume.
B. An P80,000 drop in profitability.
C. A P240,000 drop in profitability.
D. A P400,000 drop in profitability.

16. Grimes is studying the profitability of a change in operation and has gathered the following
information below. Using the information, should Grimes make the change?
 A. Yes, the company will be better off by P6,000.
B. No, because sales will drop by 3,000 units.
C. No, because the company will be worse off by P4,000.
D. No, because the company will be worse off by P22,000.

17. Gleason sells a single product at P14 per unit. The firm's most recent income statement
revealed unit sales of 80,000, variable costs of P800,000, and fixed costs of P560,000.
Management believes that a P3 drop in selling price will boost unit sales volume by 20%.
Which of the following correctly depicts how these two changes will affect the company's
break-even point?
A. Drop in Sales Price: Increase; Increase in Sales Volume: Increase
B. Drop in Sales Price: Increase; Increase in Sales Volume: Decrease
C. Drop in Sales Price: Increase; Increase in Sales Volume: No effect
D. Drop in Sales Price: Decrease; Increase in Sales Volume: Increase

18. O'Dell sells three products: R, S, and T. Budgeted information for the upcoming accounting
period shown below. Using the information, the company's weighted-average unit
contribution margin is:

A. P 3.00
B. P 3.55
C. P 4.00
D. P19.35

19. Wells Corporation has the following sales mix for its three products: A, 20%; B, 35%; and C,
45%. Fixed costs total P400,000 and the weighted-average contribution margin is P100.
How many units of product A must be sold to break-even?
A. 800
B. 4,000
C. 20,000
D. An amount other than those above.

20. The following information relates to Day Company: Sales revenue P12,000,000;
Contribution margin P4,800,000; Net income P800,000. Day's operating leverage factor is:
A. 0.167
B. 0.400
C. 2.500
D. 6.000
21. A company, subject to a 40% tax rate, desires to earn P500,000 of after-tax income. How
much should the firm add to fixed costs when figuring the sales revenues necessary to
produce this income level?
A. P200,000
B. P300,000
C. P500,000
D. P833,333

22. Barney, Inc., is subject to a 40% income tax rate. The following data pertain to the period
just ended when the company produced and sold 45,000 units: Sales revenue P1,350,000;
Variable costs P810,000; Fixed costs P432,000. How many units must Barney sell to earn
an after-tax profit of P180,000?
A. 42,000
B. 45,000
C. 51,000
D. 61,000

23. Buerhrle’s CVP income statement included sales of 2,000 units, a selling price of P100,
variable expenses of P60 per unit, and fixed expenses of P44,000. Contribution margin is
A. P200,000
B. P120,000
C. P 80,000
D. P 36,000

24. Buerhrle’s CVP income statement included sales of 2,000 units, a selling price of P100,
variable expenses of P60 per unit, and fixed expenses of P44,000. Net income is
A. P200,000
B. P80,000
C. P76,000
D. P36,000

25. For Dye Company, at a sales level of 5,000 units, sales is P75,000, variable expenses total
P40,000, and fixed expenses are P21,000. What is the contribution margin per unit?
A. P2.80
B. P7.00
C. P8.00
D. P15.00

26. Vazquez Company’s cost of goods sold is P350,000 variable and P200,000 fixed. The
company’s selling and administrative expenses are P250,000 variable and P300,000 fixed. If
the company’s sales is P1,400,000, what is its contribution margin?
A. P300,000
B. P800,000
C. P850,000
 D. P900,000

27. Vazquez Company’s cost of goods sold is P350,000 variable and P200,000 fixed. The
company’s selling and administrative expenses are P250,000 variable and P300,000 fixed. If
the company’s sales is P1,400,000, what is its net income?
A. P300,000
B. P800,000
C. P850,000
D. P900,000

28. Garland’s CVP income statement included sales of 3,000 units, a selling price of P100,
variable expenses of P60 per unit, and net income of P50,000. Fixed expenses are
A. P70,000
B. P120,000
C. P180,000
D. P300,000

29. For Danks Company, sales is $500,000, variable expenses are $310,000, and fixed
expenses are $140,000. Danks’ contribution margin ratio is
A. 10%
B. 28%
C. 38%
D. 62%

30. For Contreras Company, sales is P1,000,000, fixed expenses are P300,000, and the
contribution margin per unit is P72. What is the break-even point?
A. P1,388,889 sales peso
B. P416,667 peso
C. 13,889 units
D. 4,167 units

31. For Garland Company, sales is P1,000,000, fixed expenses are P300,000, and the
contribution margin ratio is 36%. What is net income?
A. P 60,000
B. P108,000
C. P252,000
D. P360,000

32. For Garland Company, sales is P1,000,000, fixed expenses are P300,000, and the
contribution margin ratio is 36%. What are the total variable expenses?
A. P192,000
B. P360,000
C. P640,000
D. P1,000,000
33. In 2008, Masset sold 3,000 units at P500 each. Variable expenses were P350 per unit, and
fixed expenses were P200,000. What was Masset’s 2008 net income?
A. P250,000
B. P450,000
C. P1,050,000
D. P1,500,000

34. In 2008, Masset sold 3,000 units at P500 each. Variable expenses were P350 per unit, and
fixed expenses were P200,000. The same selling price, variable expenses, and fixed
expenses are expected for 2009. What is Masset’s break-even point in sales dollars for
2009?
A. P666,667
B. P1,333,333
C. P1,500,000
D. P2,142,857

35. In 2008, Masset sold 3,000 units at P500 each. Variable expenses were P350 per unit, and
fixed expenses were P200,000. The same selling price, variable expenses, and fixed
expenses are expected for 2009. What is Masset’s break-even point in units for 2009?
A. 1,333
B. 3,000
C. 4,285
D. 6,667

36. For Jon Company, sales is P1,000,000, fixed expenses are P300,000, and the contribution
margin ratio is 36%. What is required sales in dollars to earn a target net income of
P200,000?
A. P555,556
B. P833,333
C. P1,388,889
D. P2,777,778

37. Jenks Corporation reported sales of P2,000,000 last year (100,000 units at P20 each), when
the break-even point was 80,000 units. Jenks’ margin of safety ratio is
A. 20%
B. 25%
C. 80%
D. 120%

38. For Bobby Company, sales is P1,000,000 (5,000 units), fixed expenses are P300,000, and
the contribution margin per unit is P80. What is the margin of safety in dollars?
A. P 50,000
B. P250,000
 C. P450,000
D. P700,000

39. In 2008, McDougal sold 3,000 units at P500 each. Variable expenses were P350 per unit,
and fixed expenses were P195,000. The same variable expenses per unit and fixed
expenses are expected for 2009. If McDougal cuts selling price by 4%, what is McDougal’s
break-even point in units for 2009?
A. 1,300
B. 1,354
C. 1,440
D. 1,500

40. In 2008, Thornton sold 3,000 units at P500 each. Variable expenses were P250 per unit,
and fixed expenses were P150,000. The same selling price is expected for 2009. Thornton
is tentatively planning to invest in equipment that would increase fixed costs by 20%, while
decreasing variable costs per unit by 20%. What is Thornton’s break-even point in units for
2009?
A. 600
B. 720
C. 750
D. 900

41. In 2008, Logan sold 1,000 units at P500 each, and earned net income of P40,000. Variable
expenses were P300 per unit, and fixed expenses were P160,000. The same selling price is
expected for 2009. Logan’s variable cost per unit will rise by 10% in 2009 due to increasing
material costs, so they are tentatively planning to cut fixed costs by P10,000. How many
units must Logan sell in 2009 to maintain the same income level as 2008?
A. 882
B. 1,000
C. 1,056
D. 1,118

42. Konerko Company sells two types of computer chips. The sales mix is 30% (Q-Chip) and
70% (Q-Chip Plus). Q-Chip has variable costs per unit of P30 and a selling price of P50.
Q-Chip Plus has variable costs per unit of P35 and a selling price of P65. The
weighted-average unit contribution margin for Konerko is
A. P23
B. P25
C. P27
D. P50

43. Iguchi Company sells 2,000 units of Product A annually, and 3,000 units of Product B
annually. The sales mix for Product A is
A. 40%
 B. 60%
C. 67%
D. Cannot determine from information given.

44. Konerko Company sells two types of computer chips. The sales mix is 30% (Q-Chip) and
70% (Q-Chip Plus). Q-Chip has variable costs per unit of P30 and a selling price of P50.
Q-Chip Plus has variable costs per unit of P35 and a selling price of P65. Konerko’s fixed
costs are P540,000. How many units of Q-Chip would be sold at the break-even point?
A. 6,000
B. 7,043
C. 10,000
D. 14,000

45. Uribe Company has a weighted-average unit contribution margin of P30 for its two products,
Standard and Supreme. Expected sales for Uribe are 40,000 Standard and 60,000
Supreme. Fixed expenses are P1,800,000. How many Standards would Uribe sell at the
break-even point?
A. 24,000
B. 36,000
C. 40,000
D. 60,000

46. Uribe Company has a weighted-average unit contribution margin of P30 for its two products,
Standard and Supreme. Expected sales for Uribe are 40,000 Standard and 60,000
Supreme. Fixed expenses are P1,800,000. At the expected sales level, Uribe’s net income
will be
A. P(300,000)
B. P 0
C. P1,200,000
D. P3,000,000

47. The sales mix percentages for Guillen’s Chicago and Charlotte Divisions are 70% and 30%.
The contribution margin ratios are: Chicago (40%) and Charlotte (30%). Fixed costs are
P555,000. What is Guillen’s break-even point in dollars?
A. P194,250
B. P1,500,000
C. P1,585,714
D. P1,681,818

48. A company can sell all the units it can produce of either Product A or Product B but not both.
Product A has a unit contribution margin of P16 and takes two machine hours to make and
Product B has a unit contribution margin of P30 and takes three machine hours to make. If
there are 1,000 machine hours available to manufacture a product, income will be
A. P2,000 more if Product A is made.
 B. P2,000 less if Product B is made.
C. P2,000 less if Product A is made.
D. The same if either product is made.

49. Jermaine’s Vittles can produce and sell only one of the following two products:

The company has oven capacity of 600 hours. How much will contribution margin be if it
produces only the most profitable product?
A. P6,000
B. P8,000
C. P9,000
D. P12,000

50. S-Pod’s contribution margin is P10 per unit for Product A and P12 for Product B. Product A
requires 2 machine hours and Product B requires 4 machine hours. How much is the
contribution margin per unit of limited resource for each product?
A. A: P5.00; B:P3.00
B. A: P5.00; B:P3.33
C. A: P4.00; B:P3.00
D. A: P4.00; B:P3.33

LONG PROBLEMS
1. Archie sells a single product for P50. Variable costs are 60% of the selling price, and the
company has fixed costs that amount to P400,000. Current sales total 16,000 units.
● Archie:
A. Will break-even by selling 8,000 units
B. Will break-even by selling 13,333 units
C. Will break-even by selling 20,000 units
D. Will break-even by selling 1,000,000 units

● Each unit that the company sells will:

A. Increase overall profitability by P20.
B. Increase overall profitability by P30.
C. Increase overall profitability by P50.
D. Decrease overall profitability by P5.

● In order to produce a target profit of P22,000, Archie's dollar sales must total:
A. P8,440
B. P21,100
C. P1,000,000
 D. P1,055,000

2. Lamar & Co., makes and sells two types of shoes, Plain and Fancy. Data concerning these
products are as follows:

Sixty percent of the unit sales are Plain, and annual fixed expenses are P45,000.

● The weighted-average unit contribution margin is:

A. P4.80
B. P9.00
C. P9.25
D. P17.00

● Assuming that the sales mix remains constant, the total number of units that the
company must sell to break even is:
A. 2,432
B. 2,647
C. 4,737
D. 5,000

● Assuming that the sales mix remains constant, the number of units of Plain that the
company must sell to break even is:
A. 2,000
B. 3,000
C. 3,375
D. 5,000

● Assuming that the sales mix remains constant, the number of units of Fancy that the
company must sell to break even is:
A. 2,000
B. 3,000
C. 3,375
D. 5,000

3. Vince's Pizza delivers pizzas to dormitories and apartments near a major state university.
The company's annual fixed costs are P48,000. The sales price averages P9, and it costs
the company P3 to make and deliver each pizza.
● How many pizzas must Vince's sell to break even?
Selling price per pizza P9
Less: Variable cost per pizza 3
Unit contribution margin P6
 Break-even pizzas: P48,000/P6 = 8,000

● How many pizzas must the company sell to earn a target net profit of P54,000?
Pizzas to earn P54,000: (P48,000 + P54,000) ÷ P6 = 17,000

● If budgeted sales total 9,900 pizzas, how much is the company's safety margin?
Safety margin: (9,900 x P9) - (8,000 x P9) = P17,100

4. Seventh Heaven takes tourists on helicopter tours of Hawaii. Each tourist buys a P150
ticket; the variable costs average P60 per person. Seventh Heaven has annual fixed costs
of P702,000.
● How many tours must the company conduct in a month to break even?
Selling price per tour P150
Less: Variable cost per tour 60
Unit contribution margin P90

Break-even tours: (P702,000/12 months)/P90 = 650

● Compute the sales revenue needed to produce a target net profit of P36,000 per month.
Tours to earn P36,000: [(P702,000 ÷ 12 months) + P36,000] ÷ P90 = P1,050

● Calculate the contribution margin ratio.

Contribution margin ratio: P90 ÷ P150 = 0.6

5. Fields Corporation has two divisions; Sporting Goods and Sports Gear. The sales mix is
65% for Sporting Goods and 35% for Sports Gear. Fields incurs P2,220,000 in fixed costs.
The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%.
● The weighted-average contribution margin ratio is
A. 37%
B. 40%
C. 43%
D. 50%

● The break-even point in dollars is

A. P821,400
B. 5,162,791
C. 5,550,000
D. 6,000,000

● What will sales be for the Sporting Goods Division at the break-even point?
A. P1,800,000
B. P2,100,000
C. P3,355,814
 D. P3,900,000

● What will be the total contribution margin at the break-even point?

A. P1,910,233
B. P2,220,000
C. P2,400,000
D. P2,580,000

6. Innova Discs has two divisions—Standard and Premium. Each division has hundreds of
different types of golf discs and disc golf products. The following information is available:

● What is the weighted-average contribution margin ratio?

A. 34%
B. 35%
C. 36%
D. 50%
● What is the break-even point in peso?
A. P108,000
B. P833,333
C. P857,143
D. P882,353
7. Small Fry Company has sales of P1,000,000, variable costs of P400,000, and fixed costs of
P450,000.
● Small Fry’s degree of operating leverage is
A. 0.80
B. 1.50
C. 1.67
D. 4.00
● Small Fry’s margin of safety ratio is
A. 0.18
B. 0.25
C. 0.33
D. 0.75

8. Briscoe Company sells its product for P40 per unit. During 2008, it produced 60,000 units
and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials
P10, direct labor P6, and variable overhead P2. Fixed costs are: P480,000 manufacturing
overhead, and P60,000 selling and administrative expenses.
● The per unit manufacturing cost under absorption costing is
 A. P16
B. P18
C. P26
D. P27

● The per unit manufacturing cost under variable costing is

A. P16
B. P18
C. P26
D. P27

● Cost of goods sold under absorption costing is

A. P 900,000
B. P1,080,000
C. P1,300,000
D. P1,560,000

● Ending inventory under variable costing is

A. P180,000
B. P260,000
C. P400,000
D. P900,000

● Under absorption costing, what amount of fixed overhead is deferred to a future period?
A. P 20,000
B. P 80,000
C. P100,000
D. P480,000

9. Jack Company sells its product for P11,000 per unit. Variable costs per unit are:
manufacturing, P6,000, and selling and administrative, P125. Fixed costs are: P30,000
manufacturing overhead, and P40,000 selling and administrative. There was no beginning
inventory at 1/1/07. Production was 20 units per year in 2007–2009. Sales was 20 units in
2007, 16 units in 2008, and 24 units in 2009.
● Income under absorption costing for 2008 is
A. P 8,000
B. P14,000
C. P16,000
D. P22,000

● Income under absorption costing for 2009 is

A. P33,000
B. P39,000
C. P41,000
 D. P47,000

● Income under variable costing for 2008 is

A. P 8,000
B. P14,000
C. P16,000
D. P22,000

● Income under variable costing for 2009 is

A. P33,000
B. P39,000
C. P41,000
D. P47,000

● For the three years 2007–2009,

A. Absorption costing income exceeds variable costing income by P6,000.
B. Absorption costing income equals variable costing income.
C. Variable costing income exceeds absorption costing income by P6,000.
D. Absorption costing income may be greater than, equal to, or less than variable
costing income, depending on the situation.

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