PROBLEMS SOLVING COMPUTATIONS 1. A company sells Products A, B, and C. Data about P400,000 BEP Pesos the three products are as follows: 5,422.93 BEP Units A Selling Price P 100 Variable Costs per Unit 60 Contribution Margin (units) P 40 Sales in units 1,000
B P120 90 P 30 2,000
Total Fixed Costs
C P 50 40 P 10 5,000 P101,680
The company’s break-even point in units and in pesos is? 2. A company sells two products, Product A and Product B. Three units of Product A are sold for every two units of Product B. Fixed costs is P234,000 per year.
27,000 Units
Product A is sold for P20 per unit and the variable costs identified with the production and sale of each unit of the product amounts to P14. Product B is sold for P24 per unit, and the variable costs identified with the production and sale of each unit of the product amounts to P20 The break-even point of Product A in units would be? 3. Genevieve Company and Odessa Company sell the same product in a competitive industry. Thus, the selling price of the product of each company is the same. Other data about the two companies are as follows: Fixed Costs Contribution Margin Ratio
Genevieve P50,000 40%
Odessa P70,000 52%
The indifference point in terms of peso sales volume where peso profits of the two companies are equal is?
P166,666.67
4. Basic Illustration Corporation produces and sells a single product. The selling price is P25 and the variable cost is P15 per unit. The companies fixed cost is P100,000 per month. Average monthly sales is 11,000 units.
P325,000 in Pesos 13,000 in units
If the corporation pays corporate income tax at the rate of 30% and it desires to earn after-tax profit of P21,000, it must generate a sales in units and in pesos of? 5. A company is planning to introduce a new product P53.125 or P53.13 per next year. Based on the market research conducted unit before the new product’s launching, the sales manager estimates that the company can sell about 50,000 units of the product at P50 each. Other data about the new product are as follows: Available Productive Capacity
40,000 units
Variable Costs: Prime Costs Factory Overhead Selling Expenses Fixed Cost: Manufacturing Costs, including P200,000 depreciation of new manufacturing equipment Selling and Administrative Expenses
P15 3 2
P700,000 200,000
The company’s management laid down policy that it will not approve the manufacture and sale of new products unless it would not earn a profit ratio of at least 20% The unit selling profit must be?
price
to
achieve
this
target
6. During the year 2013, Wouie Corporation’s Absorption P36/unit production was equal to its normal capacity of Variable P30/unit 1,000 units. It sold 900 units at a price of P50 per unit. The following costs were incurred during the year: Direct materials Direct labor Var. FOH Fixed FOH
Total Cost P12,000 10,000 8000 6000
Cost per unit P12 10 8 6
Var. Sell. and Admin Fixed Sell. and Admin
4,500 3,000
5 3
What would be the cost per unit under absorption and variable costing? 7. During January, 2013, Liquidan Incorporated produced 1,000 units of Product X with a cost as follows: Materials Labor Variable Factory Overhead Fixed Factory Overhead
P1,700
P6,000 3,300 2,500 1,500
Selling and administrative costs incurred during the month were: Variable selling and administrative Fixed selling and administrative Selling price per unit
P3,000 2,000 P20
Liquidan Inc. uses the JIT system. It does not keep inventories in stock. Under absorption costing, income for January 2013 was? 8. Vicencio Corporation began its operations on Absorption January 1, 2013. It produces a single product that Variable sells for P13.50 per unit. The company uses an actual (historical) cost system. During 2013 150,000 units were produced and 135,000 units were sold. There was no work-in-process inventory at December 31, 2013. Manufacturing costs and selling and administrative expenses for 2013 were as follows: Raw Materials P3.50 per unit Direct Labor 2.50 per unit Variable Factory Overhead 1.00 per unit Variable Selling and Administrative 1.20 per unit Fixed Factory Overhead P195,000 Fixed Selling and Administrative 140,000 The cost of ending inventory under the absorption and variable costing methods would be?
P124,500 P105,000
9. A company produces a single product. Production is done only when orders are received from customers. Thus, no inventory is kept at the end of the period. For the last period, the following data were available: Sales Materials Labor Rent (90% factory, 10% office) Depreciation (80% factory, 20% office) Supervision (2/3 factory, 1/3 office) Salesmen’s salaries and commission Insurance (60% factory, 40% office) Office supplies Advertising
P17,216
P32,000 7,240 4,840 2,400 2,000 1,200 1,040 960 600 560
If the company uses absorption costing, the cost of goods sold during the period was? 10. MD Santos Corporation’s 2013 manufacturing costs were as follows: Prime Costs Variable Manufacturing Overhead Costs Straight-line depreciation of factory Building and Equipment Factory supervisor’s salary (8,000 per month) Other fixed factory overhead
P836,000
P560,000 80,000 60,000 96,000 40,000
What amount should be considered product cost for external purposes? Items 11 and information:
12
are
based
on
the
following 11. P75,000 12. P800,000
Consider the following data about a company: Current Ratio Acid-test Ratio Current Liabilities at year-end Inventory, Beginning of the year Inventory Turnover
3.5 to 1 3.0 to 1 P150,000 125,0000 8 times
11. What is the value of the company’s inventory at the end of the year? 12. How much is the during the year?
company’s
cost
of
goods
sold
Items 13-15 information:
are
based
on
the
Net Sales Cost of Goods Sold Operating Expenses Earnings Before interest and Tax Net Income Total Stockholder’s Equity Total Assets Cash flow from operating activities
following 13. ROI 19.5% P1,800,000 1,080,000 315,000 405,000 195,000 750,000 1,000,000 25,000
14. Cash flow margin 1.4% 15. Current Liabilities P60,000
13. The return on investment (%) is? 14. The cash flow margin (%) is? 15. If the company has current assets of P200,000, including inventory of P800,000 and a quick ratio of 2:1, what is the value of the company’s current liabilities? Items 16 to 20 are selected financial and 16. 2 or 2:1 operating data taken from the financial statements of Jimmy Antiporda Recording Company. 17. 1 or 1:1
Cash Accounts Receivables (Net) Merchandise Inventory Marketable Securities (Short term) Land and Buildings (Net) Bonds Payable (Long-Term) Accounts Payable (Trade) Notes Payable (Short term)
P
As of December 31 2013 2012 80,000 P 640,000 400,000 720,000
1,200,000 1,200,000
240,000
80,000
2,720,000
2,880,000
2,160,000
2,240,000
560,000
880,000
160,000
320,000
19. 8.33 times or 8.33X 20. 41.67%
For the year Ended December 31 2013 2012 Sales (20% cash, 80% credit sales) Cost of Goods Sold
18. 18.4 times or 18.4X
P18,400,000 8,000,000
P19,200,000 11,200,000
Based on the Information following questions:
above.
Answer
the
16. Current ratio as of December 31, 2013 17. Quick (acid-test) ratio as of December 31, 2013 18. Accounts receivable turnover for 2013 19. Merchandise inventory turnover for 2013 20. The gross margin rate (%) for 2012
..............Nothing follows..............
