Problem 2 The Honey Company is comparing its present absorption costing practices with direct costing methods. An examination of its records produced the following information: Maximum plant capacity 40,000 units Normal capacity 36,000 units Fixed factory overhead P54,000 Fixed marketing and administrative expense P20,000 Sales price per unit 10 Standard variable manufacturing cost per unit 4 Variable marketing expense per unit sold P. 1 For the year, the following data are available: Budgeted production 36,000 units Actual production 30,000 units Sales 28,000 units Finished goods inventory, January 1 P1,000 Unfavorable variances from standard variable manufacturing costs P5,000 All variances are written off directly at year-end as an adjustment to Cost of Goods Sold. Required: 1. Prepare the income statement under the direct costing method. 2. Prepare the income statement under the absorption costing method