Reference no: EM132634363

The president of Toblerone, Inc. has been reviewing the income statements of the two most recent months. She is puzzled because sales rose and profits fell in March, and she asks you, the controller, to explain.

                                                      February                             March

Sales (P30 per case)                             P 540,000                 P 660,000

Standard cost of sales                              270,000                  330,000

Standard gross profit                                P 270,000               P330,000

Volume variance                                        40,000                   (50,000)

Selling and administrative expenses                  (150,000)          (150,000)

Income                                                           P160,000             P130,000

The standard fixed cost per case is P10, based on normal capacity of 20,000 cases per month.

REQUIRED:

Question 1) Determine production in each month.

Question 2) Prepare the income statement using variable costing.