Based on the following information, please calculate the cost of goods manufactu

Question

Based on the following information, please calculate the cost of goods manufactured for the month:

Sales revenue

$1,500,000

Gross margin

$600,000

Ending work-in-process inventory

$50,000

Beginning work-in-process inventory

$80,000

Ending finished goods inventory

$100,000

Beginning finished goods inventory

$125,000

Marketing costs

$250,000

Administrative costs

$150,00

Diez sells disposable dishes. Each dish sells for $20 and costs $10 to make. The $10 cost is entirely variable, however, she also incurs $5,000 of fixed costs each month. How many dishes will Diez have to sell in order to make a profit of $45,000 per month if taxes are 25%?

Thanks ! need to double check answers

Sales revenue

$1,500,000

Gross margin

$600,000

Ending work-in-process inventory

$50,000

Beginning work-in-process inventory

$80,000

Ending finished goods inventory

$100,000

Beginning finished goods inventory

$125,000

Marketing costs

$250,000

Administrative costs

$150,00

Explanation / Answer

Diez sells disposalble dishes.

The sales price = $ 20

Variable cost = $ 10

Contribution per dish = $ 20 - $ 10 = $ 10

Fixed Cost = $ 5,000 per month i.e. $ 60,000 per annum.

Proft required after tax @ 25% = $ 45,000 per month

Required profit before tax should be $ 60,000 per month

Total Number of dishes required to sell to get $ 45,000 per month after tax @ 25% =

= Fixed cost per month i.e $ 5,000+ required profit before tax i.e $ 60,000 / contribution per dish i.e $ 10

= $ 5,000 + $ 60,000 / $ 10 = $65,000/$10 = 6,500 dishes.

Therefore, to get $ 45,000 per month after tax 25%, 6,500 dishes to be sold.

Double check:

Sales value of 6,500 dishes per month = $ 130,000 (6500*20)

Less Varaible Cost @ 10 per dish       = $    65,000 (6500*10)

Contribution                                         = $ 65,000

Less: Fixed cost per month                 =   $   5,000

Profit per montn before tax                  = $ 60,000

Tax at 25%                                           =  $  15,000

Prorfit after tax per month                    = $  45,000 (required profit after tax)

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.