PROBLEM 3

A. In this case, direct materials are the only item that qualifies as a throughput cost. Throughput
costing is a method that assigns only the unit-level of spending amounts for direct costs as the cost of
products or services.

B. Ending inventory: 0 + 40,000 units - 35,000 units = 5,000 units

5,000 units x P20 = P100,000

C. Krell Corporation
Throughput-Costing Income Statement
For the Year Ended December 31, 20x1

Sales revenue (35,000 units x P80) P2,800,000

Less: Cost of goods sold (35,000 units x P20) (700,000)
Gross margin P2,100,000

Less: Operating costs:

Direct labor P 215,000
Variable manufacturing overhead 340,000
Fixed manufacturing overhead 528,000
Variable selling and administrative costs
(35,000 units x P8) 280,000
Fixed selling and administrative costs 220,000

Total operating costs (P 1,583,000)

Net income P 517,000

PROBLEM 4

Beg. WIP P40,000

DM (*) 190,000
DL 150,000
OH 250,000 (?) -work back

Less: End. WIP (45,000)

COGM (*) P585,000

 Beg. RM P50,000
Purchase 195,000
End. RM (55,000)
DM P190,000*

 Beg. FG P60,000
COGM P585,000*
End. FG (50,000)
COGS P595,000
 Manufacturing Company
Cost of Goods Manufactured
For Period Ending Month, Day, Year

Beginning WIP Inventory P40,000

Raw Materials:
Beginning Inventory P 50,000
Purchases 195,000
Materials Available for Use P245,000
Ending Inventory (55,000)
Raw Materials Used P190,000
Direct Labor 150,000
Factory Overhead 250,000
Total Manufacturing Costs P590,000
Total Work in Process P630,000
Ending Work in Process (45,000)
Cost of Goods Manufactured P585,000

Manufacturing Company
Cost of Goods Sold
For Period Ending Month, Day, Year

Beginning Finished Goods Inventory P 60,000

Cost of Goods Manufactured 585,000
Goods Available for Sale P645,000

Less:
Ending Finished Goods Inventory (50,000)
Cost of Goods Sold P595,000
PROBLEM 5

Prime Costs:
Raw Material (Beginning) P 9,900 
Purchases 40,800 
Raw Material Available P50,700 
Raw Material (Ending) (7,600)
Raw Material Used P 43,100
Direct Labor (23,600 x P13.75)  324,500
Prime Costs P367,600

Conversion Costs:
Direct Labor P324,500
Overhead   21,750
Conversion Costs P346,250

PROBLEM 6

Manufacturing Costs:
Raw Material, Nov. 1 P 17,400 
Purchases  120,000 
Raw Material Available P137,400 
Raw Material, Nov. 30  (13,200)
Raw Material Used P124,200
Direct Labor (21,000 x P13) 273,000

Overhead:
Depr.-Factory Equipment P17,300 
Repairs/Maintenance-Factory 7,400 
Indirect Labor 11,200 
Insurance-Factory 1,770 
Factory Supplies Used     350 
Total Overhead   38,020
Total Manufacturing Costs P435,220

Cost of Goods Manufactured:

Total Manufacturing Costs P435,220 
Work in Process, Nov. 1 31,150 
Work in Process, Nov. 30 (28,975)
Cost of Goods Manufactured P437,395 

Cost of Goods Sold:

Finished Goods. Nov. 1 P 19,200 
Cost of Goods Manufactured 437,395 
Total Goods Available P456,595 
Finished Goods, Nov. 30 (25,500)
Cost of Goods Sold P431,095