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Exercise 5-8

The document contains examples of calculating break-even point, margin of safety, contribution margin, and profit for various scenarios involving sales, variable costs, fixed costs, and units. It demonstrates how to calculate break-even point in units and sales, contribution margin, margin of safety, and profit for businesses with given sales, variable costs, fixed costs, and number of units. Formulas used include break-even point in units equals fixed costs divided by contribution margin per unit, and break-even point in sales equals fixed costs divided by contribution margin ratio.

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Kaye Magbiray
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247 views8 pages

Exercise 5-8

The document contains examples of calculating break-even point, margin of safety, contribution margin, and profit for various scenarios involving sales, variable costs, fixed costs, and units. It demonstrates how to calculate break-even point in units and sales, contribution margin, margin of safety, and profit for businesses with given sales, variable costs, fixed costs, and number of units. Formulas used include break-even point in units equals fixed costs divided by contribution margin per unit, and break-even point in sales equals fixed costs divided by contribution margin ratio.

Uploaded by

Kaye Magbiray
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Exercise 5-8

A.

Sales 850,000 100% BEP in Pesos = Fixed Cost


Variable Cost 340,000 40% CM Ratio
Contribution Margin 510,000 60% BEP in Pesos = 510,000
Fixed Cost (510,000) (100% - 40%)
Profit 0 BEP in Pesos = 510,000
60%
BEP in Pesos = 850,000

B.

Per Unit Percent


Sales 25 100%
Variable Cost 18.75 75%
CM 6.25 25%

Breakeven units = 625,000


25
Breakeven units = 100,000 units

C.

Breakeven point in units = Fixed Cost


CM Unit
Breakeven point in units = 440,000
22
Breakeven point in units = 22,000 units

D.

SELLING PRICE PERCENTAGE TOTAL BEP in units = Fixed Cost


Sales (50 X 20,000 units) 50 100% 1,000,000 CM Unit
Variable Cost 37.5 75% (750000) BEP in units = 250,000
Contribution Margin 12.5 25% 250,000 12.5
Fixed Cost (250,000) BEP in units = 20,000 units
Profit 0

E.

SELLING PRICE PERCENTAGE TOTAL


Sales (50,000 units) 5 100% 250,000
Variable Cost 3 60% 150,000
Contribution Margin 2 40% 100,000
Fixed Cost (100,000)
Profit 0
Exercise 5-9

1.
TOTAL
Sales ₱25 * 40,000 units 1,000,000
Variable Cost ₱15 * 40,000 units (600,000)
Contribution Margin ₱10 * 40,000 units 400,000
Fixed Cost (350,000)
Profit ₱ 50,000

2.
Breakeven point in sales = Fixed cost
Contribution Margin Ratio
Breakeven point in sales = 350,000
40% VCIS*
Breakeven point in sales = 875,000
Sales
Variable Cost
Breakeven point in units = Fixed cost Contribution Margin
Contribution Margin in units Fixed Cost
Breakeven point in units = 350,000 Profit
10
Breakeven point in units = 35,000

3.

Margin of safety = Sales - Breakeven point in sales


Margin of safety = [(₱25 * 40,000 units) - 875,000]
Margin of safety = ( ₱ 1,000,000 - ₱ 875,000)
Margin of safety = ₱ 125,000

4.
Suggested Format:
(A) (B) (C)
Sales 1200000 950000 1000000
Variable Cost 600000 570000 660000
Contribution Margin 600000 380000 340000
Fixed Cost 350000 350000 350000
Profit 250000 30000 -10000
Profit Percentage 20.83% 3.16% -1.00%
Break-even Point
- unit
- sales
Margin of Safety
30 38,000 units 16.5

Selling Price 25
Variable Cost 15
Fixed Cost 350,000
Units 40,000
PRICE PERCENTAGE TOTAL
₱25 100% 875,000
₱15 60% 525,000
₱10 40% 350,000
(350,000)
0
(D) (E) (F) (G)
1000000 1440000 500000 925000
600000 1080000 300000 511000
400000 360000 200000 414000
360,000 350000 300,000 350,000
40,000 10000 -100000 64000
4.00% 0.69% -20.00% 6.92%

360,000 20 300,000 add 30000 to VC of 13 pesos


72,000 20,000 37,000 units
4-a Per Unit Unit
Sales 25 38,000
Variable Cost
Contribution Margin
Fixed Cost
Profit

4-a Breakeven point in units = Fixed cost


Contribution Margin in units
Breakeven point in units = 350,000
8.75
Breakeven point in units = 40,000

4-b Breakeven point in units = Fixed cost


Contribution Margin in units
Breakeven point in units = 350,000
8.75
Breakeven point in units = 40,000
% Total
100% 950,000
15.7895% 600,000
350000
(350000)
0

Breakeven point in sales Fixed cost


Contribution Margin Ratio
Breakeven point in sales 350,000
29.17%
Breakeven point in sales 1,199,863

Breakeven point in sales Fixed cost


Contribution Margin Ratio
Breakeven point in sales 350,000
29.17%
Breakeven point in sales 1,199,863

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