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# COST OF PRODUCTION IN THE SHORT RUN

Requirements:
a.) Compute for TFC, TVC and TC per month
A.1) Total Fixed cost
Telephone bill (Land line)
Building Monthly rental
Freezer (30,000 x 20% Dep allowance)
Ladle (5pcs @ 40 = 200 x 20% Dep
allowance)

450.00
6,000.00
6,000.00
40.00

## Mixing bowl (Big)(300 @ pcs = 1,200 x 20%

Dep allowance
Electricity bill
Water bill
Cellphone unit ( 600 x 20% Dep allowance)
worker (2 @ 250/day x 24 days)
Total Fixed cost
A.2) Total variable cost

240.00
6,000.00
700.00
120.00
500.00
12,000.00

32,050.00
Price
QTY/unit

Total cost

130.00

20

2,600.00

## I kilo o fyoung coconut (buko), Shredded

1 bottled sugar palm fruit (Kaong),
drained

200.00

50

10,000.0
0

80.00

10

100.00

3500

800.00
350,000.
00

90.00

10

900.00

60.00

10

600.00

35.00

20

700.00

Cream

45.00

20

900.00

Sweet corn

50.00

10

500.00
367,000.
00

## Total Variable cost

3.) Total cost
Total Variable cost
Total Fixed cost

367,000.
00

32,050.0
0
399,050.
00

Total cost
B.) Compute for TR and profit if the price per cups of fruit
B.1) Total fixed cost ( please see item A.1)

32,050.0
0

367,000.
00

## B.3) Total cost

B.4) Average fixed cost
Total fixed cost
Divided by Output
Average fixed cost

399,050.
00
32,050.00
175,000.00
0.18

## B.5) Average variable cost

Total Variable cost
Divided by Output
Average variable cost

367,000.
00
175,000.
00
2.10

## B.6) Average total cost

Average variable cost
Average fixed cost

2.10
0.18

2.28

## B.7) Total revenue

175,000 cups (output)

175,000.
00

SRP

10.00

Total Revenue

1,750,00
0.00

B.8) Profit
Total revenue

1,750,000.

00

399,050.0
0

Total cost

1,350,95
0.00

Profit

C.) if the output increase by 20%. It requires additional cost for all variable 10% .
Compute
for the MC, TC, TR, Profit and Total Capital investment (TCI). Refer your answer in
problems a and b for your MC.
C.1 ) Marginal cost
Change Total cost or change in TVC
(367,000 x 10%)
Divide by Change in output (175,000 x
20%)

36,700.0
0
35,000.0
0

Marginal cost

1.05

32,050.0
0
403,700.
00
435,750.
00

## Total fixed cost

Total Variable cost ( 367,000 x 110%)
Total Cost
C.3) Total Revenue
Output (175,000 x 120% )
Selling price (SP)

210,000.00
10.00

Total Revenue

2,100,000.
00

C. 4 Profit
2,100,000.
00

Total Revenue

435,750.0
0
1,664,250
.00

## Less: Total cost

Profit
C.5 Total capital Investment
Initial Investment for one month operation
1.) Capital Expenditures

Price

QTY

Amount

15,000.0
0
40.00
300.00
600.00

Freezer
Mixing bowl (Big)
Cellphone unit

2
5
4
1

30,000.00
200.00
1,200.00
600.00
32,000.00

## 2.) Operating expenses (one Month)

Can of fruit cocktail (1kg)
I kilo of young coconut (buko), Shredded
Telephone bill (Land line)
1 bottled sugar palm fruit (Kaong),
drained
Building Monthly rental
1 pack of cups (50 pcs)
Bottled coconut gel (nata de coco), drained
Can of pineapple chunks, drained
1 can sweetened condensed milk
Cream
Sweet corn
Electricity bill
Water bill
1 worker

130.00
200.00
450.00

20
50
1

2,600.00
10,000.00
450.00

80.00
6,000.00
100.00
90.00
60.00
35.00
45.00
50.00
6,000.00
700.00
500.00
250.00

10
1
3,500
10
10
20
20
10
1
1
1
2

800.00
6,000.00
350,000.00
900.00
600.00
700.00
900.00
500.00
6,000.00
700.00
500.00
12,000.00

392,650.00

## Total Capital Investment

424,650.0
0

D. What is the maximum profit earned by ABH-GME company? If you are the
president will you be happy for getting this profit? If yes/no, why?
Answer: The maximum profit is 1,664,250 and yes much happy simply because
return of investment will be recovered in less than one month.

****END*******

## Philippine Christian University

1648 Taft Ave, Malate, Manila, 1000 Metro Manila
(02) 526 2261

Managerial Economics

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