Hello Gabriela,
Could you please show your solution to the exercise so that we can identify where the mistake might be? It would be easier to answer your question that way
Could you please show your solution to the exercise so that we can identify where the mistake might be? It would be easier to answer your question that way
I'm not been able to calculate the total cost of Preparation, Milling and packing. I believe my main problem is with how does GMO gives to the other cost centers, How do I calculate it ? are the remaining costs still 1 652 000 € ?
Hello! Could you please help me with the Total Costs of each centre? I have preparation TC = 597131.05 and unit cost = 32.277, Milling TC= 945423.65 and UC= 378.169, Packing TC = 607481.05 and I do not know how to calculate its unit cost.
I am also not getting the right values for this exercise.
In 13.2.a) I had the following values:
- Production of bulk flour = 14500 tonnes
- Consumption of wheat = 17400 tonnes
- Weighted average cost per ton of wheat = 15€
- Consumption of wheat (€) = 261000€
- MOH for bulk flour (€) = 300271.1€ (sum of preparation department with milling department)
- COGM = 261000 + 300271.1=561271€
- COGM per tonne = 38.7€
In 13.2.a) I had the following values:
- Production of bulk flour = 14500 tonnes
- Consumption of wheat = 17400 tonnes
- Weighted average cost per ton of wheat = 15€
- Consumption of wheat (€) = 261000€
- MOH for bulk flour (€) = 300271.1€ (sum of preparation department with milling department)
- COGM = 261000 + 300271.1=561271€
- COGM per tonne = 38.7€
I have almost the same values as you, but my MOH is 1542609,46. Either way I'm not getting the right values either
You are right. My MOH values are wrong. After correcting the MOH values, I got the COGM per tonne = 126.157€, which is still not the right value (according to the solutions)
This exercise is a little complex. Regarding 13.2, you should start by looking at Bulk flour:
- The direct material used produce bulk flour is wheat. Since Opening stocks are 2.500 tons (at 11.3€ each) and Purchases are 18.500 tons (15.5€/ton), through the WAC valuation method you should arrive to a COGM/ton of 15€. You don't know closing stocks of wheat, but you know that the company uses 1,2 tons of wheat to produce 1 ton of Bulk flour, so you will be able to find closing stocks of wheat through some reverse engineering.
- Regarding bulk flour, there are 1.500 tons of opening stocks. In order to find production of bulk flour, you'll need to look at the production of Flour for domestic use (DF) and Flour for industrial use (IF) - each bag of DF uses 1kg of bulk flour and each bag of IF uses 50kg of bulk flour
- Company produced 3.625.000 bags of DF and 217.500 bags of IF, so on total they used 14.500 tons of bulk flour. Opening stocks of bulk flour were 1.500 tons and closing stocks were 0, meaning that the company produced 13.000 tons of bulk flour. Therefore, that means the company used 15.600 tons of wheat. Through the WAC you had calculated before, you get to DM of 234.000€ and then you just need to add the MOHs regarding the Preparation (597.152,32€) and Milling (945.457,14€) cost centres
- Thus, COGM = 1.776.609,46€ and COGM/ton of 136,66€
With this explanation I think you will be able to solve 13.2 b) and c).
Good study!
Pedro Perdigão
Ok, I understand my mistake now. Thank you :)
thank you, i got the right values now for 13.2a,b,c. However i went to do the P&L and my answer isn't correct. How do I calculate the PBT ? I did sales =3.550.000*0,4+218000*13 = 4252000. I believe here is my problem : for the COGS I did 3550000(units sold)*0,2556(COGM/UNIT)+218000*8,6689 = 2797200,2. This way I get a gross profit of 1456799,8. I take out non man cost of 347800, which gives me 1.108.799,8 and not 1 134 668.33. Where did I go wrong ? what do I do to fix it ?