The Karen Co. uses a single manufacturing overhead cost pool in its job-costing system. It uses a normal costing system with actual machine hours as the allocation base. The following data are :

Budgeted manufacturing overhead P4,800,000

Overhead allocation base machine-hours

Budgeted Machine hours 80,000

Manufacturing overhead incurred P4,900,000

Actual machine-hours 75,000

Machine-hours and the ending balances (before proration of under-or over allocated) are as follows:

Actual machine-hours 2018 End of Year Balance

Cost of goods sold 60,000 P8,000,000

Finished goods 11,000 1,250,000

Work in process 4,000 750,000

1.Assume that over- or under applied factory overhead is material in amount and the variance is allocated to cost of goods sold and inventories based on applied overhead, how much cost of goods sold would appear on the income statement for the year 2018?

2.Assume that over- or under applied factory overhead is immaterial in amount and the variance is closed to cost of goods sold, how much cost of goods sold would appear on the income statement for the year 2018?