A.

Determine a BREAK EVEN POINT

Break even point in unit: Break even point in pesos

Formula: Fixed cost / Unit Contribution Margin formula: Fixed cost / contribution marg

Fixed cost ₱54,000.00 Fixed cost

UCM Formula: (add) CMR formula: (percentage)
Selling Price ₱25.00 Selling Price
Direct Materials ₱10.00 Unit Contribution Margin
Direct Labor ₱5.00 CMR
Manufacturing Support Cost ₱2.50 Break Even Point in Pesos:
Sales Commission ₱2.50
Unit Contribution Margin: 5.00 *
Break Even Point in Unit: 10,800 *

B. Determine the NET INCOME

[(Selling Price x Sales Volume) - ((Sales - Variable cost) -

OR
(Unit variable cost x Sales Volume) - (Total fixed cost)) =
Total fixed cost = Profit

SP = ₱25.00 Sales =
SV = ₱12,000.00 VC =
UVC = ₱20.00 CM =
SV = ₱12,000.00 TFC =
TFC = ₱54,000.00 PROFIT = ₱0.00
PROFIT = ₱6,000.00 *

C. Determine the MARGIN OF SAFETY

Margin of Safety in PESOS Margin of Safety in UNIT

formula: Formula
Total Sales(at actual or budgeted) - Total Sales in Units -
Break Even Sales in PESO Break Even Sales in Units

TS = ₱300,000.00 TSU = 12,000

BESP = ₱270,000.00 * BESU = 10,800
MSP = ₱30,000.00 * MSU = 1,200
 D. Determine the Margin of Safety Ratio (MSR)

Formula:
Margin of Safety in PESOS / Total Sales

MSP = ₱30,000.00 *
TS = ₱300,000.00 *
MSR = 0.10 *

E. Determine the PROFIT using the MSR and CMR

Formula:
Margin of Safety in PESO x
Contribution Margin Ratio

MSP = ₱30,000.00 *
CMR = 0.2 *
PROFIT = ₱6,000.00 *

F. Determine the number of units that must be sold

to earn the profit of ₱8,000.00 "before" tax or pre-tax

Formula:
Total Fixed Cost + Desired pre-tax profit
Desired Sales in UNIT =
Contribution Margin per Unit

TFC = ₱54,000.00 *
pre-tax = ₱8,000.00 *
CMU = 5.00 *
DSU = 12,400 *

Formula:
Total Fixed Cost + Desired pre-tax profit
Desired Sales in PESOS =
Contribution Margin per RATIO

TFC = ₱54,000.00 *
pre-tax = ₱8,000.00 *
CMU = 0.2 *
DSP = ₱310,000.00 *
G. Determine the number of units that must be sold to earn the profit of
₱8,000.00 "after" tax and assume further a tax rate of 20

Formula:
Total Fixed Cost + [Desired after-tax profit / (1-Tax rate) ]
Desired Sales in UNIT =
Contribution Margin in UNIT

TFC = ₱54,000.00 *
After tax = ₱8,000.00 *
CMU = 5.00 *
Tax rate = 0.20 *
DSU = 12,800 *
x Selling Price ₱25.00 *
₱320,000.00 *

Formula:
Total Fixed Cost + [Desired after-tax profit / (1-Tax rate) ]
Desired Sales in PESOS =
Contribution Margin in RATIO

TFC = ₱54,000.00 *
After tax = ₱8,000.00 *
CMR = 0.20 *
Tax rate = 0.20 *
DSP = ₱320,000.00 *
in pesos

: Fixed cost / contribution margin ratio

₱54,000.00

₱25.00
ibution Margin 5.00
%
CMR 20.00 *
ak Even Point in Pesos: ₱270,000.00 *

(Contribution Margin) -
Profit

n UNIT

les in Units -
n Sales in Units

*
*