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  • Exercise 5-8

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    Kaye Magbiray
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    The document contains examples of calculating break-even point, margin of safety, contribution margin, and profit for various scenarios involving sales, variable costs, fixed costs, and units. It demonstrates how to calculate break-even point in units and sales, contribution margin, margin of safety, and profit for businesses with given sales, variable costs, fixed costs, and number of units. Formulas used include break-even point in units equals fixed costs divided by contribution margin per unit, and break-even point in sales equals fixed costs divided by contribution margin ratio.

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    Original Title

    BEP (1)

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    The document contains examples of calculating break-even point, margin of safety, contribution margin, and profit for various scenarios involving sales, variable costs, fixed costs, and units. It demonstrates how to calculate break-even point in units and sales, contribution margin, margin of safety, and profit for businesses with given sales, variable costs, fixed costs, and number of units. Formulas used include break-even point in units equals fixed costs divided by contribution margin per unit, and break-even point in sales equals fixed costs divided by contribution margin ratio.

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    © All Rights Reserved
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    88 views8 pages

    Exercise 5-8

    Uploaded by

    Kaye Magbiray
    The document contains examples of calculating break-even point, margin of safety, contribution margin, and profit for various scenarios involving sales, variable costs, fixed costs, and units. It demonstrates how to calculate break-even point in units and sales, contribution margin, margin of safety, and profit for businesses with given sales, variable costs, fixed costs, and number of units. Formulas used include break-even point in units equals fixed costs divided by contribution margin per unit, and break-even point in sales equals fixed costs divided by contribution margin ratio.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 8

    Exercise 5-8

    A.

    Sales 850,000 100% BEP in Pesos = Fixed Cost


    Variable Cost 340,000 40% CM Ratio
    Contribution Margin 510,000 60% BEP in Pesos = 510,000
    Fixed Cost (510,000) (100% - 40%)
    Profit 0 BEP in Pesos = 510,000
    60%
    BEP in Pesos = 850,000

    B.

    Per Unit Percent


    Sales 25 100%
    Variable Cost 18.75 75%
    CM 6.25 25%

    Breakeven units = 625,000


    25
    Breakeven units = 100,000 units

    C.

    Breakeven point in units = Fixed Cost


    CM Unit
    Breakeven point in units = 440,000
    22
    Breakeven point in units = 22,000 units

    D.

    SELLING PRICE PERCENTAGE TOTAL BEP in units = Fixed Cost


    Sales (50 X 20,000 units) 50 100% 1,000,000 CM Unit
    Variable Cost 37.5 75% (750000) BEP in units = 250,000
    Contribution Margin 12.5 25% 250,000 12.5
    Fixed Cost (250,000) BEP in units = 20,000 units
    Profit 0

    E.

    SELLING PRICE PERCENTAGE TOTAL


    Sales (50,000 units) 5 100% 250,000
    Variable Cost 3 60% 150,000
    Contribution Margin 2 40% 100,000
    Fixed Cost (100,000)
    Profit 0
    Exercise 5-9

    1.
    TOTAL
    Sales ₱25 * 40,000 units 1,000,000
    Variable Cost ₱15 * 40,000 units (600,000)
    Contribution Margin ₱10 * 40,000 units 400,000
    Fixed Cost (350,000)
    Profit ₱ 50,000

    2.
    Breakeven point in sales = Fixed cost
    Contribution Margin Ratio
    Breakeven point in sales = 350,000
    40% VCIS*
    Breakeven point in sales = 875,000
    Sales
    Variable Cost
    Breakeven point in units = Fixed cost Contribution Margin
    Contribution Margin in units Fixed Cost
    Breakeven point in units = 350,000 Profit
    10
    Breakeven point in units = 35,000

    3.

    Margin of safety = Sales - Breakeven point in sales


    Margin of safety = [(₱25 * 40,000 units) - 875,000]
    Margin of safety = ( ₱ 1,000,000 - ₱ 875,000)
    Margin of safety = ₱ 125,000

    4.
    Suggested Format:
    (A) (B) (C)
    Sales 1200000 950000 1000000
    Variable Cost 600000 570000 660000
    Contribution Margin 600000 380000 340000
    Fixed Cost 350000 350000 350000
    Profit 250000 30000 -10000
    Profit Percentage 20.83% 3.16% -1.00%
    Break-even Point
    - unit
    - sales
    Margin of Safety
    30 38,000 units 16.5

    Selling Price 25
    Variable Cost 15
    Fixed Cost 350,000
    Units 40,000
    PRICE PERCENTAGE TOTAL
    ₱25 100% 875,000
    ₱15 60% 525,000
    ₱10 40% 350,000
    (350,000)
    0
    (D) (E) (F) (G)
    1000000 1440000 500000 925000
    600000 1080000 300000 511000
    400000 360000 200000 414000
    360,000 350000 300,000 350,000
    40,000 10000 -100000 64000
    4.00% 0.69% -20.00% 6.92%

    360,000 20 300,000 add 30000 to VC of 13 pesos


    72,000 20,000 37,000 units
    4-a Per Unit Unit
    Sales 25 38,000
    Variable Cost
    Contribution Margin
    Fixed Cost
    Profit

    4-a Breakeven point in units = Fixed cost


    Contribution Margin in units
    Breakeven point in units = 350,000
    8.75
    Breakeven point in units = 40,000

    4-b Breakeven point in units = Fixed cost


    Contribution Margin in units
    Breakeven point in units = 350,000
    8.75
    Breakeven point in units = 40,000
    % Total
    100% 950,000
    15.7895% 600,000
    350000
    (350000)
    0

    Breakeven point in sales Fixed cost


    Contribution Margin Ratio
    Breakeven point in sales 350,000
    29.17%
    Breakeven point in sales 1,199,863

    Breakeven point in sales Fixed cost


    Contribution Margin Ratio
    Breakeven point in sales 350,000
    29.17%
    Breakeven point in sales 1,199,863

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