PFA Ltd uses a throughput costing system and reported the following information for its first month of operations: Units produced…………………………………..140
Units sold………………………………………..120
Material cost per unit produced……………….$3.50
Conversion cost per unit produced……………$6.50
Fixed period costs per unit produced………….$6.00
Variable period costs per unit produced………$4.00
Selling price per unit…………………………$25.00
PFA's throughput costing operating profit will be
A) $270
B) $600
C) $400
D) None of the above

Question

Quizplus · Accepted Answer

Throughput costing operating profit = (Selling price per unit - Variable period costs per unit produced - Fixed period costs per unit produced) * Units sold= (25 - 4 - 6) * 120= 15 * 120= $1800

PFA Ltd Uses a Throughput Costing System and Reported the Following