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Assignment 2 - Practice 2 - CVP Analysis

The document provides information about Clayroll Products, which produces units that sell for P100 each with variable costs of P40 per unit. Clayroll sold 5,000 units and has total fixed costs of P60,000. Based on this, the net income is calculated to be P240,000. The contribution margin per unit is P60 and the contribution margin ratio is 60%. If Clayroll sells 500 more units, net income would increase by P30,000. If sales increased by P20,000, net income would increase by P12,000.

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378 views2 pages

Assignment 2 - Practice 2 - CVP Analysis

The document provides information about Clayroll Products, which produces units that sell for P100 each with variable costs of P40 per unit. Clayroll sold 5,000 units and has total fixed costs of P60,000. Based on this, the net income is calculated to be P240,000. The contribution margin per unit is P60 and the contribution margin ratio is 60%. If Clayroll sells 500 more units, net income would increase by P30,000. If sales increased by P20,000, net income would increase by P12,000.

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joint account
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Clayroll Products produces a unique item with the following information:

Sales price P100 per unit


Variable costs P40 per unit
Fixed Costs (total) P60,000
Units sold 5,000

Required: Calculate the following based on the above information:


1. Net income
2. Contribution margin per unit
3. Contribution margin ratio
4. If Clayroll sells 500 more additional units, by what amount will net income
increase?
5. If Clayroll has an additional P20,000 in sales, by what amount will net income
increase?

Answers:

Total Contribution Margin per


Unit
Sales P500,000 P100
Less: Variable Costs 200,000 40
Contribution Margin 300,000 60
Less: Fixed Costs 60,000
Net Income P240,00

1. Net Income = P240,000

2. Contribution Margin per unit = P300,000 / 5,000 units= P60

3. Contribution Margin Ratio


= Contribution Margin / Sales
= P300,000 / 500,000
= 60%
4. 500 units x P60 = P30,000 increase

5. P20,000 / P100 = 200 units


200 units x P60 = P12,000 increase

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