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What the gross profits respectively are

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Mike Company predicted that factory overhead for 2006 and 2007 would be P60,000 for each year. The predicted and actual activity for 2006 and 2007 were 30,000 and 20,000 direct labor hours, respectively.

                                                                     2006                  2007
Sales in units                                   25,000            25,000
Selling price per unit                             P10               P10
Direct materials and direct labor per unit   P 5                  P 5

The company assumes that the long-run production level is 20,000 direct labor hours per year. The actual factory overhead cost for the end of 2006 and 2007 was P60,000. Assume that it takes one direct labor hour to make one finished unit.

Problem 1: When the annual estimated factory overhead rate is used, the gross profits for 2006, respectively, are

Reference no: EM132755265

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