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Selena Industries manufactures a single product. Variable production costs are P20 and fixed production costs are P150,000. Selena uses a normal activity of 10,000 units to set its standard costs. Selena began the year with no inventory, produced 11,000 units, and sold 10,500 units.
Question 1: What is the Ending inventory under variable costing and absorption costing would be?
Question 2: What is the volume variance under variable costing and absorption costing would be?
Question 3: By how much would the income between the two methods would differ?
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