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  • Assignment 2 - Practice 2 - CVP Analysis

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    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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    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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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    327 views2 pages

    Assignment 2 - Practice 2 - CVP Analysis

    Uploaded by

    joint account
    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.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    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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