Variable Cost and Contribution Margin

CASH FLOW DIRECT/INDIRECT

1. Given the following information and using the indirect method prepare the Cash Flows from Operating Activities section of the statement of cash flows. End of Year Beginning of Year Change
Cash 23,500 37,400 (13,900)
Accounts receivable (net) 84,500 80,350 4,150
Inventories 100,200 94,300 5,900
Prepaid expenses 4,970 5,300 (330)
Accounts payable (creditors) 71,400 68,900 2,500
Salaries Payable 5,320 6,450 (1,130) Net Income reported on the income statement for the current year was 134,800.
Depreciation expense recorded on buildings and equipment was 27,400 for the year.
Solution:
Net Income P134,800
Add: Decrease in prepaid expenses 330 Increase in Accounts Payable 2,500 Depreciation Expense 27,400 30,230 165,030
Deduct: Increase in Accounts Receivable 4,150 Increase in Inventories 5,900 Decrease in Salaries Payable 1,130 11,180
Net Cash Flows from Operating Activities P153,850

COST VOLUME PROFIT
1. Melanie Company produces a merchandise that has the following data: Unit Sales price P80 per unit Unit vairiable costs P48 per unit Total fixes costs P640,000 per annum Units sold during the current year P25,000 units