Solve the following

1. Given: Selling price per unit = P20

Total fixed expenses = P8,000

variable expenses per unit = P15.

Find break-even sales in units.

b. Given: sales = P40,000

variable expenses = P30,000 fixed expenses = P7,500

net income = P2,500

Find break even sales

c. Given: selling price per unit = P30

Total fixed expenses = P32,000 Variable expenses per unit = P14 Find total sales in units to

achieve a profit of 8,000

assuming no change in selling

price

d. Given: sales = P50,000

Variable expenses = P20,000 Fixed expenses = P25,000 Net income = P5,000

Assume no change in selling price; find net income if activity volume increase by 10%

e. Given: selling price per unit = P40

Total fixed expenses = P80,000 (increased 10%, P88,000)

Variable expenses per unit = P30 (reduced 20%,P24)

Assume total variable expenses are reduced by 20% per unit, and the total fixed expenses are

increased by 10%. Find the sales in units to achieve a profit of

P16,000, assuming no change in selling price.

The Manila General Hospital has overall variable costs of 30% of total revenue and fixed costs of P35 million per year.

a.Compute the break-even point expressed in total revenue.

b.A patient-day is often used to measure the volume of a hospital. Supposed there are going to be 50,000 patient days next year. Compute the average daily revenue per patient necessary to break-even.

The budgeted income statement of Taft Trading

is summarized as follows:

Income P800,000

Less: Expenses (including P400,000 fixed exp) 880,000

Net Loss P(80,000) The manager believes that an increase of

P200,000 in advertising and promotion will increase sales substantially.

a.At what sales volume will the store

break-even after spending P200,000 in

advertising and promotion?

b.What sales volume will result in a net

profit of P40,000?

Ms Santos wants to sell t-shirts at a Charity

Bazaar. The booth rental is P2,000. The selling

price of a t-shirt is P200, and the variable cost of each piece is P120.

a.How many t-shirts must Ms Santos sell

to break-even?

b.How many t-shirts must be sold to attain

a target operating income of P1,440?

The projected income statement of McKenzie-

Brackman, Philippines is as follows:

Revenues P 500,000 Deduct costs:

Variable P350,000

Fixed 250,000 600,000

Operating loss P(100,000)

Assume that variable costs will remain the same percentage of revenues:

a.If fixed costs are increased by P100,000,

what amount of revenue will cause the

firm to break-even?

b.With the proposed increased in fixed

costs, what amount of revenue will yield

an operating income of P50,000?

Trans-Auto Corporation operates three car

dealerships nationwide. It is thinking of opening

up a new outlet in Batangas which has the

following cost and revenue relationships:

Variable data: Per unit:

Selling price 300,000

Cost per unit 195,000

Sales com(5% of selling price) 15,000

Annual fixed costs:

Rent 600,000

Salaries 2,000,000

Advertising 800,000

Other fixed costs 200,000

Required (consider each question separately):

a.What is the annual break-even point in

unit sales and in peso sales?

b.If 35 units were sold during the first year

of operation, what would be the new

outlet's operating income/loss?

c.If the outlet manager was paid P3,000

commission per unit sold. What would

be the annual break-even point in unit sales and peso sales?

d.Refer to the original data. If the sales

commissions were discontinued in favor

of a P600,000 increase in annual

salaries, what would be the annual

break-even point in unit sales and peso sales?

e.Refer to the original data. If the outlet

manager was paid P3,000 commission

on each unit sold in excess of the break-

even point, what would be the outlet's

operating income if 50 units were sold?

7. Suppose Mr. Jose Tadeo, a sole proprietor, has a

20% income tax rate; a contribution margin

ratio of 30% on the product he sells; and fixed

costs of P380,000. How much sales should he

generate to achieve an after-tax income of

P80,000?

The K Company has a maximum capacity of

200,000 units per year. Variable manufacturing

costs are P12 per unit. Fixed factory overhead is P600,000 per year. Variable marketing and

administrative costs are P5 per unit, and fixed marketing and administrative costs are P300,000 per year. Current sales price is P23 per unit.

a.What is the break-even point in units and

peso sales?

b.How many units must be sold to earn a

target operating income of P240,000 per

year?

c.Assume that the company's sales for the

year just ended totaled 185,000 units. A

strike at a major supplier has caused a

materials shortage, so that the current

year's sales will reach only 160,000

units. Top management is planning to

slash fixed costs so that the total for the

current year will be P85,000 less than

last year. Management is also thinking

of increasing the selling price, reducing

variable costs, or both, in order to earn a

target operating income that will be the

same peso amount as last year's. K

company has already sold 30,000 units

this year at a sales price of P23 per unit

with variable costs per unit unchanged.

What contribution margin per unit is

needed on the remaining 130,000 units

in order to reach the target operating

income?

9. University rooms has annual fixed costs

applicable to its room of P3 million for its 400-

room dorm. Average daily room rents is P50

and average variable cost is P10/day for each

room rented. It operates 365 days per year.

a.How much net income on rooms will be

generated:

*If the dorm is completely full

throughout the entire year?

*If the dorm is half-full?

b.Compute the break-even point in number

of rooms rented. What percentage

occupancy for the year is needed to break-even?