6. The assets and equities of the Perdales, Ceballus and Bandonell partnership at the end of its fiscal year ended Oct. 31, 2019 are as follows: Assets Equities Liabilities Cash P15,000 P50,000 Receivable-net 20,000 Loan from Bandonell 10,000 40,000 Perdales, Capital (30%) Ceballus, Capital (50%) Bandonell, Capital (20%) Inventory 45,000 Property and Equipment 70,000 30,000 15,000 P150,000 The partners decided to liquidate the partnership. They estimated that the non-cash assets, Loan to Ceballus 5,000 P150,000 other than the loan to Ceballus, can be converted into P100,000 cash over the two-month period ending Dec. 31, 2019. Cash is to be distributed to the appropriate parties as it becomes available during the liquidation process. The partner most vulnerable to partnership losses on liquidation is Perdales Bandonell Ceballus Ceballus and Perdales equally
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
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