For May 2023, ABC CORP. had cost of goods manufactured equal to P90,000 of which 75%...

 

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For May 2023, ABC CORP. had cost of goods manufactured equal to P90,000 of which 75% is considered variable within the entire production for the year; direct materials used P30,000; cost of goods sold, P100,000; direct labor, P38,000; purchases of materials, P40,000; cost of goods available for sale, P125,000; and total factory labor, P46,000. Other indirect factory overhead costs were P2,000. Work in process was P25,000 on May 1 and P15,000 on May 31. The company uses a single materials account for direct and indirect materials. The costs of Operating Expenses are 30% of sales of which 60% is charged to the administrative expenses and the balance is to the selling expenses. Of these amount 30% were identified as fixed costs. Raw Materials Inventory on May 31 is 50% of the total raw materials available for use. The corporation maintain its gross profit at 60% of cost of sales for the year 2023. The management ignores the income tax for the budget purposes. Required: Prepare the following: (1) Income statement using absorption costing with a schedule of cost of goods manufactured. For brevity, show single-line items for factory overhead and direct materials used. (2) Income statement using variable costing for management use. (3) What is the break-even-point in peso if 75% of the total operating expenses is fixed costs and all other costs are considered variable costs. For May 2023, ABC CORP. had cost of goods manufactured equal to P90,000 of which 75% is considered variable within the entire production for the year; direct materials used P30,000; cost of goods sold, P100,000; direct labor, P38,000; purchases of materials, P40,000; cost of goods available for sale, P125,000; and total factory labor, P46,000. Other indirect factory overhead costs were P2,000. Work in process was P25,000 on May 1 and P15,000 on May 31. The company uses a single materials account for direct and indirect materials. The costs of Operating Expenses are 30% of sales of which 60% is charged to the administrative expenses and the balance is to the selling expenses. Of these amount 30% were identified as fixed costs. Raw Materials Inventory on May 31 is 50% of the total raw materials available for use. The corporation maintain its gross profit at 60% of cost of sales for the year 2023. The management ignores the income tax for the budget purposes. Required: Prepare the following: (1) Income statement using absorption costing with a schedule of cost of goods manufactured. For brevity, show single-line items for factory overhead and direct materials used. (2) Income statement using variable costing for management use. (3) What is the break-even-point in peso if 75% of the total operating expenses is fixed costs and all other costs are considered variable costs.

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ABC CORP May 2023 Statements and BreakEven Point Calculation 1 Income Statement using Absorption Costing Schedule of Cost of Goods Manufactured ItemAm... View the full answer