Student Doubts Forum

Exercise 18.2

Exercise 18.2

by Mariana Nunes Maurício -
Number of replies: 3
My COGS for the Peach Juice is 440 700€, while in the solutions is 366 600.

However: COGS = DM+DL+MOH (here they say there is no chnage in WIP)

DL = 11300
MOH = 1230*16+950*18 = 36780
DM = Peaches consumed + Bottles comsumed + Other DM

Peaches consumed = 520*260 = 135200 ( as company uses LIFO, we will consume the purchased ones)
Bottles = 1 150 000 * 0.20 = 230 000 (again we use the bpurchased one due to LIFO)
Other DM = 27 420

I do not know what I could me doing wrong which would compensate this difference in solution.

Thank you for the help

In reply to Mariana Nunes Maurício

Re: Exercise 18.2

by María Fabini Otegui -
Hi Mariana, could you help me with the equations for the service cost centres please? (18.1)
I have these ones but I think there is something wrong.
PG = 4150 + 100LH/500LH * cleaning + 4150/64940 * GMO
Cleaning = 3010 + 1000kw/20000kw * PG + 3010/64940 * GMO
GMO = 2340
In reply to María Fabini Otegui

Re: Exercise 18.2

by Mariana Nunes Maurício -
In the exercise it is said: "which are allocated to the production
centres proportionately to their directly assigned manufacturing costs. " . This means that the GMO only allocates costs to the Preparation and Transformation and does not allocate to PG and Cleaning.

Thus, when you do the equation you do no include GMO, PG will allocate to cleaning and cleaning to PG, so the equation is:
PG = 4150 + (100LH/500LH)*cleaning
Cleaning = 3010 + (1000kw/20000kw)*PG
GMO = 2340
In reply to Mariana Nunes Maurício

Re: Exercise 18.2

by Madalena dos Santos de Paiva -
Hello Mariana,

Sorry, you are right. The solutions are not correct, as the value 366 600 € is repeated two times. The COGM for the Peach Juice product should be 440,700€

Best,

Madalena Paiva