ELEMENTARY COST VOLUME ANALYSIS Dr. Nelson S. Abeleda Exercise A On the blank space provided below, indicate the estimated net profit under each of the following independent assumptions given the profit determinants. Selling price per units P 25 Variable cost per unit 17 Fixed costs per annum, P 125,000 Units to be sold, 30,000 1. Selling price will increase by 10%. 2. Variable cost per unit will decrease by 10%. 3. Fixed cost will increase by 20%. 4. Units to be sold will increase by 5%. 5. All the profit determinants will increase by 8%. 6. P 60,000 of the fixed costs will be reclassified as variable cost. 7. P 15,000 of the variable cost will be reclassified as fixed cost. 8. The contribution margin per unit will increase by 10%. Exercise B On the blank space provided below, indicate the estimated net profit under each of the following independent assumptions given the budgeted net income. Sales P 180,000 Fixed costs P 42,000 Variable costs 108,000 150,000 Net income P 30,000 1. Sales price will increase by 10%. 2. Variable cost will increase by 5% due to the increase in materials cost. 3. Fixed costs wil increase by 12%. 4. Physical sales volume will increase by 20%. 5. All the profit determinants will increase by 15%. 6. P 25,000 of the variable costs will be reclassified as fixed costs. 7. P 12,000 of the fixed costs will be reclassified as variable costs. 8. The contribution margin will decease by 10%.Exercise C 1. AA Company sells its product at P 16 per unit. Variable costs are P 11.20 per unit and fixed costs are P 154,000 per annum. The company estimated its profit to be P 21,200 during the year. How many units are estimated to be sold? units 2. BB Company has total fixed expenses of P 250,000 with variable expenses equal to 60% of sales. Its expected net income is computed at P 91,600. How much is the expected sales revenue P 3. CC Company incurred fixed costs of P180,000 last year with contribution margin ratio to sales of 32%. The company incurred a loss of P 32,800. What was the sales revenue last year? P 4. DD Company can generate maximum sales of P 825,000 a year. The variable cost ratio to sales is 55% and the fixed costs are P 128,430 a year. The company wants to earn net income of P 168,570 during the year. At what percentage capacity level should the company operate to meet the desired net income? % 5. EE Company earned net income of P 60,000 last year with fixed costs of P 80,000. the contribution margin ratio was 40%. How much variable costs were incurred last year P
