Rafael Luis C.

Pamonag May 24, 2021

BSBA-2B MWF(4PM-5PM)
FM121:Financial Analysis and Reporting Prof: Mr. Francisco A. Baraquel
Assignment
P-1
Outlast Company’s projected profit for the year is as follows:

Total Per Unit

Sales 200,00 20
0
Variable cost 120,00 12
0
Contribution margin 80,000 8
Total fixed cost 64,000
Operating Income 16,000

Required:
1. Compute the variable cost ratio. Compute the contribution margin ratio.
Answer:
Variable Cost Ratio = Variable cost/units

= ₱ 12/ ₱ 8 ,00 0
= 0.15%

Contribution Margin ratio = Contribution margin per unit/selling price per unit

= ₱ 8 / ₱ 20
= 40%

2. Compute the break-even point in units.

Answer:
¿ Expense
Break-even point in units =
Selling price per unit−Variable Cost per unit

₱ 64,000
=
₱ 20− ₱ 12

₱ 64,00 0
=
₱8

= ₱ 8 , 00 0 .00units
3. Compute the break-even point in sales value.
Answer:
¿ Expense
Break-even sales value =
Contribution Margin ratio

₱ 64,000
= 0.40

= ₱ 160,0 00.00
4. Create a break-even graph

Total costs Sales

2000 88,000 40,000
4000 112,000 80,000
6000 136,000 120,000
8000 160,000 160,000

Break-even Analysis
350,000

300,000

250,000

200,000

150,000

100,000

50,000

0
2000 4000 6000 8000

Total costs Sales

5. How many units must be added to earn a profit of ₱30,000?

Answer:
BE Units= ₱30,000/20 per unit
= ₱1,500 units
 6. Using the contribution margin ratio in #1 above, compute the additional profit that Outlast
would earn if sales were ₱25,000 more than expected.
Answer:
¿ Expense
Break-even sales Amount =
Contribution Margin ratio

₱ 25,000
= 0.40

= ₱ 62,500 .00

P-2
Hammond Company produces a single product with a price of ₱12/unit, variable cost per unit of ₱3,
and total fixed cost of ₱7,200.
1. Compute the break-even sales in units and sales amount.
Answer:
¿ Expense
Break-even sales in units =
Selling price per unit−Variable Cost per unit

₱ 7,200
=
₱ 12−₱ 3

₱ 7,200
=
₱9
= ₱ 800.00 units

¿ Expense
Break-even sales Amount =
Contribution Margin ratio

₱ 7,200
= 0.75

= ₱ 9,600.00

2. Compute the variable cost ratio. Compute the contribution margin ratio.
Answer:
Variable Cost Ratio = Variable/units

= ₱ 3 / ₱ 800
= 0.375%

Contribution Margin ratio = Contribution margin per unit/selling price per unit

= ₱ 9/ ₱ 12
= 75%

P-3
Hammer Head Company plans to sell 5,000 bicycle helmets at ₱750 each in the coming year. Unit
variable cost is ₱450 (includes direct materials, direct labor, variable factory overhead and variable
selling expenses). The total fixed cost equals ₱495,000 (includes fixed factory overhead and fixed
selling and administrative expenses).
1. Calculate the break-even number of helmets to be sold.
Answer:
BEP= Total Fixed Cost / (Price-Variable cost per unit)
= ₱495,000 / (750-450) = ₱495,000 /300
= 1,650 units to be sold

2. Prepare a proforma income statement to check your answer.