Exercise 1

Camia Corporation sells products for P14 each that have variable costs of P11 per unit. Camia's annual fixed cost is P153,000.

Required: use the per unit contribution margin approach to determine the break-even point in units and in pesos.

Exercise 2

Rose Company incurs annual fixed costs of P54,320. Variable costs for Rose's products are 7.80 per unit and the sales price if 13 per unit. Rose desires to earn an annual profit of P45,000.

Required: Use the contribution margin ratio approach to determIne sales volume in pesos and units required to earn the desired profit

Exercise 3

Lirio Company produces a product that sells for P22 per unit and has a variable cost of P17 per unit. Lirio incurs annual fixed costs of P220,000. It desires to earn a profit of P80,000.

Required: Use the equation method to determine the sales volume in units and peso required to earn the desired profit

Exercise 4

Daisy Enterprises produces a product with fixed costs of P25,000 and variable cost of P1.50 per unit. The company desires to earn a P12,000 profit and believes it can sell P10,000 units of the product.

Required:

a) Based on this information, determine the target sales price.

Exercise 5

Gumamela Company makes a product that sells for P19 per unit. The company pays P8 per unit for the variable costs of the product and incurs annual fixed costs of P176,000. Gumamela expects to sell P21,000 units of product.

Required: Determine Gumamela's margin of safety expressed as a percentage.