1.

) Required: Unit Cost for 10000 units

(20000 units) (10000 units)
Per Unit % Per Unit %
a. Sales 6 100% 6 100%
b. Variable Cost (4.5) 75% (2.25) 37%
c. C.M. 1.5 25% 3.75 63%
d. Fixed Cost (1.4) (1.4)
e. Net Income 2.3 2.35

Unit Cost = FC+VC
Units Produced
=14000+22500
10000
=3.65/unit

2.) Required: Impact on Net Operating income and Unit Sales

A B
(20000 Units) % (10000 units) %
a.) Sales 1440000 (6/unit) 100% 1584000 100%
b.) Less: Total Cost (Net of Fixed Cost) (1080000) (4.5/unit) 4.5% (1080000) 68.88%
c.) Net Operating Income 360000 (1.5/unit) 1.5% 504000 31.82%


3.) A B
Regular Customer (15000 units)
Sales 90000 90000
Variable Cost (67500) (67500)
Contribution Margin 22500 22500
Fixed Cost (21000) (21000)
Net Income 1500 1500

Government (5000 units)
Sales (Net of Reimbursements) 23500
Variable Cost (15000)
Contribution Margin 8500
Fixed Cost (5500)
Net Income 3000

Operating income in alternative B is greater than A by Php 3000

D. Alt. A Alt. B
Sales 120000 90000
Less: VC 90000 67500
Cont. Margin 30000 22500
Less: FC 28000 21000
Net Operating income 2000 1500

Govt =5000 units
Sales Net of Reimbursements 23500
Less: VC 15000
Cont. Margin 8500
Less: FC 5500
Net Income 3000

Alternative Bs income is higher by P2500 than alternative A.

5.) One Time Order: 10000
Variable Cost: 75/unit
Fixed Cost: 4000
Required: Breakeven Sales Price

Per Unit 10000 units
Incremental Revenue 4.15 41500
Less: Incremental Cost
Variable Cost
Direct Materials 1.00 10000
Direct Labor 1.20 12000
Variable OH .80 8000
Shipping Cost .75 7500
Total Variable cost 37500
Fixed Cost
Contract 4000
Total Incremental Cost 41500
Incremental Net Operating Income 0

6.) Incremental Costs
Variable Cost
Direct Materials 1.00 1000
Direct Labor 1.2 1200
Variable Overhead 2.3 2300
Total Variable Cost 4.5 4500

7.)
Per Unit Buy Per Unit Make
Variable Cost
Direct Materials 1.00 20000 1.00 20000
Direct labor 1.2 24000 1.2 24000
Variable Overhead .64 12800 .80 16000
Total Variable Cost 2.84 3
Fixed Cost
Fixed Overhead .25 50000 .5 10000
3.09 61800 3.5 70000

Difference in favor of buying: .41/unit, 8200/ 20000 units