FORMULAS
Manufacturing Cost of Goods Sold
Raw Materials, Beginning
+ Raw Materials Purchases
- Raw Materials, Ending
= Direct Materials Used
+ Direct Labor
+ Manufacturing Overhead
= Manufacturing Costs
+ Work-in-Process, Beginning
- Work-in-Process, Ending
= Cost of Goods Manufactured
+ Finished Goods, Beginning
- Finished Goods, Ending
= Cost of Goods Sold
Xxx
Xxx
Xxx
Xxx
Xxx
Xxx
Xxx
Xxx
Xxx
Xxx
Xxx
Xxx
Xxx
Problem 1: Cost of Goods Sold (COGS) in a Manufacturing Company
ABC Manufacturing Co. provided the following data for the year:
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Raw Materials Inventory, Beginning: ₱15,000
Raw Materials Purchased: ₱50,000
Raw Materials Inventory, Ending: ₱10,000
Direct Labor: ₱30,000
Manufacturing Overhead: ₱40,000
Work-in-Process Inventory, Beginning: ₱12,000
Work-in-Process Inventory, Ending: ₱14,000
Finished Goods Inventory, Beginning: ₱20,000
Finished Goods Inventory, Ending: ₱25,000
Required: Compute the Cost of Goods Sold (COGS).
Problem 2: Contribution Margin and Contribution Margin Ratio
XYZ Corporation sells a product for ₱40 per unit. The company’s variable cost per unit is ₱15.
Required:
a) Compute the Contribution Margin per Unit using the formula:
b) Compute the Contribution Margin Ratio using the formula:
Problem 3: Break-even in Units
ABC Enterprises has the following cost structure:
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Selling Price per Unit = ₱25
Variable Cost per Unit = ₱10
Fixed Costs = ₱50,000
Required: Compute the break-even units using the formula:
Problem 4: Break-even Sales in Pesos
DEF Company has the following financial information:
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Selling Price per Unit = ₱50
Variable Cost per Unit = ₱30
Total Fixed Costs = ₱80,000
Required: Compute the break-even sales in pesos using the formula:
Problem 5: Target Net Income Calculation
A company wants to earn a target net income of ₱40,000. The company provides the following
data:
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Selling Price per Unit = ₱30
Variable Cost per Unit = ₱15
Fixed Costs = ₱60,000
Tax Rate = 20%
Required: Compute the number of units needed to achieve the target net income using the
formula:
Problem 6: Margin of Safety Calculation
A company reports the following sales data:
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Actual Sales = ₱500,000
Break-even Sales = ₱350,000
Required: Compute the Margin of Safety in both pesos and percentage using the formulas:
Problem 7: Computing Contribution Margin for a Multi-Product Business
A company produces two products: Product A and Product B. Below is the financial data for
each product:
Product Selling Price per Unit Variable Cost per Unit Units Sold
A
₱50
₱20
5,000
B
₱80
₱40
3,000
Required:
a) Compute the total contribution margin for each product.
b) Compute the overall contribution margin ratio for the business.