Problem III

Clawie Cosmetics has three major product line, Hair Care, Facial Care and Skin Care. The following statement of profit or loss for the year ended April 30, 2019, was prepared by product line, using the full cost allocation.

Explanatory data are as follows:

(a) Cost of goods sold. The company's inventories of materials and finished products do not vary significantly from year to year. Factory overhead was applied to products at 120% of direct labor costs. The factory overhead costs for the year were as follows:

Variable indirect labor and suppliesP50,000

Variable employee benefits on factory labor30,000

Supervisory salaries and related benefits 100,000

Plant occupancy cost P 180,000

Clawie Cosmetics Statement of Profit or Loss For the Year Ended April 30, 2019 (in thousands) Hair Care Facial Care SkinCare Total Sales in pounds 2,000 500 500 3,000 Revenues from sales P 1,000 P 400 P 200 P 1,600 Cost of goods sold: Materials 330 160 100 590 Direct labor 90 40 20 150 Factory overhead 108 48 24 180 Total cost of goods sold 528 248 144 920 Gross profit 472 152 56 680 Commercial expenses: Marketing expenses: Advertising 50 30 20 100 Commissions 50 40 20 110 Sales salaries and related benefits 30 20 10 60 Total marketing expense 130 90 50 270 General and administrative expenses Licenses 50 30 20 100 Salaries and related benefits 60 25 15 100 Total general and administrative expenses 110 55 35 200 Total commercial expenses 240 145 85 470 Operating income P 232 P 7 P (29) P 210 Explanatory data are as follows (continuation)