Moltres Manufacturing Company had the following account balances for the quarter ending March 31: Direct Materials ₱ 378,000 Indirect Materials 85,000 Direct manufacturing labor 480,000 Indirect manufacturing labor 182,200 Property taxes on manufacturing plant building 28,800 Property taxes on company headquarters 48,200 Advertising Expense 35,000 Salespersons' company vehicle costs 12,000 Depreciation of
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.
Moltres Manufacturing Company had the following account balances for the quarter ending March 31:
| Direct Materials | ₱ 378,000 | |
| Indirect Materials | 85,000 | |
| Direct manufacturing labor | 480,000 | |
| Indirect manufacturing labor | 182,200 | |
| Property taxes on manufacturing plant building | 28,800 | |
| Property taxes on company headquarters | 48,200 | |
| Advertising Expense | 35,000 | |
| Salespersons' company vehicle costs | 12,000 | |
| 261,100 | ||
| Depreciation of office equipment | 123,600 | |
| Depreciation of laptops used by sales personnel | 53,600 | |
| Miscellaneous plant |
135,000 | |
| Plant utilities | 92,400 | |
| General office expenses | 305,400 | |
| Marketing distribution costs | 30,000 |
₱______________ is the total amount of Selling Cost of Moltres Manufacturing Company.
₱____________ is the total amount of Administrative Cost of Moltres Manufacturing Company.
₱______________ is the total amount of Factory Overhead of Moltres Manufacturing Company.
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