Student Doubts Forum

Problem 5: P&L by Function

Problem 5: P&L by Function

by María Fabini Otegui -
Number of replies: 3

Hello Madalena, I've been trying to solve the P&L by Function as we talked today in class but I can't.

I think the problem is with COGS.
I calculated the COGM doing DM (31000) + DL with TSC (should this be 25000 + 25000*0.575?) + Manufacturing Costs ( 1750+30000) - changes in WIP
Then COGS would be COGM - changes in finished goods right?

Can you spot my error?

Thanks!

In reply to María Fabini Otegui

Re: Problem 5: P&L by Function

by Pedro Pinto da Silva Perdigão -
Hello María

Your reasoning seems to be correct for the COGS:

31.000€ (DM) + 39.375€ (DL with TSC of 57,5%) + 31.750€ (MOH) - 1.500€ (Change in WIP) = 100.625€

As you rightly pointed out, COGS will be COGM - change in FG inventories, thus:

COGS = 100.625€ - (7000-6500) = 100.125€

Hope this helps!

Pedro Perdigão
In reply to Pedro Pinto da Silva Perdigão

Re: Problem 5: P&L by Function

by María Fabini Otegui -

Perfect, thank you.


So now we have Sales = 190000, COGS = 100125, SG&A = 73250, TSC for SG&A = 4226.24 and then Financial Costs = 3000. I think I am missing something as the EBT does not give me the same answer of the solution book.

In reply to María Fabini Otegui

Re: Problem 5: P&L by Function

by Madalena dos Santos de Paiva -
Hello María,

I believe the issue is with the SG&A costs.

Regarding selling costs, these should include the €3,000 for fuel, €20,000 for depreciation, and €14,000 × 1.575 for salaries, including TSC.
As for general and administrative costs, these should include the €250 for pens, €25,000 for depreciation, and €11,000 × 1.575 for salaries, including TSC.
This way, the total SG&A costs amount to €87,625.

Hope this helps!

Best,
Madalena Paiva