Forbes Company's product sells for P16 and has a variable cost per unit of P12. Fixed

costs are P120,000.

Required:

1. Compute the break-even point in pesos.

2. Compute the number of units required to earn a P30,000 profit.

3. Forbes has a target profit of P36,000 and expects to sell 30,000 units.

Compute the selling price Forbes must charge to earn the target profit.

4. Forbes wants to keep its selling price at P16 per unit and earn a 10% return

on sales. Calculate the number of units Forbes must sell to meet the target.

Cagayan Company sells three products. Planned results for next year are as follows:

A B C

Unit Selling Price P10 P8 P4

Unit Variable Costs P4 P6 P1

Sales Mix in pesos 25% 25% 50%

Total Fixed Costs P500,000

Required:

1. Compute the weighted contribution margin percentage.

2. Compute the sales in pesos required to earn a P100,000 profit.

3. Supposed now that the sales mix, in units, is 25%, 25%, 50%. Determine the

weighted contribution margin per unit.

4. Determine the total unit sales needed to earn a P100,000 profit.

Park Company markets two computer games: Ping and Pong. A contribution format

income statement for a recent month for the two games appears below:

Ping Pong Total

Sales P100,000 P50,000 P150,000

Variable expenses 25,000 5,000 30,000

Contribution margin P 75,000 P45,000 P120,000

Fixed expenses 90,000

Net operating income P 30,000

Required:

1. Compute the overall contribution margin ratio.

2. Compute the overall break-even point for the company in sales pesos.

3. Verify the overall break-even point for the company by constructing a

contribution format income statement showing the appropriate levels of sales

for the two products.