PFA Corporation 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 income will be:
A)$270
B)$600
C)$400
D)None of the above

Question

Quizplus · Accepted Answer

Throughput costing operating income = (Units produced * Throughput cost per unit) - (Units sold * Selling price per unit)Throughput cost per unit = Material cost per unit produced + Conversion cost per unit produced + Fixed period costs per unit produced + Variable period costs per unit producedThroughput cost per unit = $3.50 + $6.50 + $6.00 + $4.00 = $20.00Throughput costing operating income = (140 * $20.00) - (120 * $25.00) = $270

PFA Corporation Uses a Throughput Costing System and Reported the Following