Exercise 1: Compute for BESu

1. Fixed Costs are P120,000. Each unit of product is sold for P10 and the VC/unit is P7 40,000
2. The contribution margin is 40% of sales revenue and the fixed costs are P90,000. Each unit of product sells for P25 9,000
3. The variable costs to manufacture and sell a product are 80% of sales. Fixed costs are P78,200 and each unit of product sells for P40 9,775
4. The total variable costs are P84,000, which are 70% of sales. Fixed Costs are P28,500 and the units sold are 4,800 3,800
5. At a sales volume level of 75,000 units, the contribution margin is one and one half time the fixed costs and is 25% of sales. Fixed costs are P20,000 50,000
6. A company's break even is estimated to be 25% of actual sales. The sales revenue from the sale of 80,000 units amounts to P640,000 20,000
7. Fixed costs are P220,000. This amount can be fully recovered is 55,000 units will be sold at a price of P12 . 55,000
8. At the break even point, the total variable cost is P37,500 and the total fixed cost is P25,000. Selling price is P10 6,250

Exercise
1-1 Units to sold Price per unit Total Percentage
Sales 40,000 10 400,000 100%
Variable
Cost 40,000 7 280,000 70%
Contributi
on Margin 40,000 3 120,000 30%
Fixed
Cost 120,000 30%
Net
Income 0 0%

Exercise
1-2 Units to sold Price per unit Total Percentage
Sales 9,000 25 225,000 100%
Variable
Cost 9,000 15 135,000 60%
Contributi
on Margin 9,000 10 90,000 40%
Fixed
Cost 90,000 40%
Net
Income 0 0%

Exercise
1-3 Units to sold Price per unit Total Percentage
Sales 9,775 40 391,000 100%
Variable
Cost 9,775 32 312,800 80%
Contributi
on Margin 9,775 8 78,200 20%
Fixed
Cost 78,200 20%
Net
Income 0 0%

Exercise Exercise Price per Percentag

1-4 Units to sold Price per unit Total Percentage Actual: 1-4 Units sold unit Total e
Sales 3,800 25 95,000 100% Sales 4,800 25 120,000 100%
Variable Variable
Cost 3,800 17.5 66,500 70% Cost 4,800 17.5 84,000 70%
Contributi Contributi
on Margin 3,800 7.5 28,500 30% on Margin 4,800 7.5 36,000 30%
Fixed Fixed
Cost 28,500 30% Cost 28,500 24%
Net Net
Income 0 0% Income 7,500 6%

Exercise Exercise Price per Percentag

1-5 Units to sold Price per unit Total Percentage Actual: 1-5 Units sold unit Total e
Sales 50,000 1.6 80,000 100% Sales 75,000 1.6 120,000 100%
Variable Variable
Cost 50,000 1.2 60,000 75% Cost 75,000 1.2 90,000 75%
Contributi Contributi
on Margin 50,000 0.4 20,000 25% on Margin 75,000 0.4 30,000 25%
Fixed Fixed
Cost 20,000 25% Cost 20,000 17%
Net Net
Income 0 0% Income 10,000 8%

Exercise Exercise Price per Percentag

1-6 Units to sold Price per unit Total Percentage Actual: 1-6 Units sold unit Total e
Sales 20,000 8 160,000 100% Sales 80,000 8 640,000 100%
Variable Variable
Cost - - - 0% Cost - - - 0%
Contributi Contributi
on Margin - - - 0% on Margin - - - 0%
Fixed Fixed
Cost - 0% Cost - 0%
Net Net
Income - 0% Income - 0%

Exercise
1-7 Units to sold Price per unit Total Percentage
Sales 55,000 12 660,000 100%
Variable
Cost 55,000 8 440,000 67%
Contributi
on Margin 55,000 4 220,000 33%
Fixed
Cost 220,000 33%
Net
Income 0 0%

Exercise
1-8 Units to sold Price per unit Total Percentage
Sales 6,250 10 62,500 100%
Variable
Cost 6,250 6 37,500 60%
Contributi
on Margin 6,250 4 25,000 40%
Fixed
Cost 25,000 40%
Net
Income 0 0%
Exercise 2: Compute for BESpeso
1. The contribution margin per unit is P5. Fixed costs are P126,000. The variable cost per unit is P3.20 206,640
2. The unit contribution margin is P3. Sales revenue will amount to P480,000 if 40,000 units are sold. Fixed costs are P97,500 390,000
3. The total variable costs at a sales volume level of 4,500 units are P360,000. the contritbution margin per unit is P20 and fixed costs are P48,000 240,000
4. At sales volume level of 12,000 units, the total contribution margin is P36,000, which is 1.5 times the fixed costs. The variable cost per unit is P5. 64,000
5. Fixed cosrs are 120% recovered when 42,000 units are sold at a price of P50 per unit. Fixed costs are P437,500 1,750,000

Exercise
2-1 Units to sold Price per unit Total Percentage
Sales 25,200 8.2 206,640 100%
Variable
Cost 25,200 3.2 80,640 39%
Contributi
on Margin 25,200 5 126,000 61%
Fixed
Cost 126,000 61%
Net
Income 0 0%

Exercise Exercise Price per Percentag

2-2 Units to sold Price per unit Total Percentage Actual: 2-2 Units sold unit Total e
Sales 32,500 12 390,000 100% Sales 40,000 12 480,000 100%
Variable Variable
Cost 32,500 9 292,500 75% Cost 40,000 9 360,000 75%
Contributi Contributi
on Margin 32,500 3 97,500 25% on Margin 40,000 3 120,000 25%
Fixed Fixed
Cost 97,500 25% Cost 97,500 20%
Net Net
Income 0 0% Income 22,500 5%

Exercise Exercise Price per Percentag

2-3 Units to sold Price per unit Total Percentage Actual: 2-3 Units sold unit Total e
Sales 2,400 100 240,000 100% Sales 4,500 100 450,000 100%
Variable Variable
Cost 2,400 80 192,000 80% Cost 4,500 80 360,000 80%
Contributi Contributi
on Margin 2,400 20 48,000 20% on Margin 4,500 20 90,000 20%
Fixed Fixed
Cost 48,000 20% Cost 48,000 11%
Net Net
Income 0 0% Income 42,000 9%

Exercise Exercise Price per Percentag

2-4 Units to sold Price per unit Total Percentage Actual: 2-4 Units sold unit Total e
Sales 8,000 8 64,000 100% Sales 12,000 8 96,000 100%
Variable Variable
Cost 8,000 5 40,000 63% Cost 12,000 5 60,000 63%
Contributi Contributi
on Margin 8,000 3 24,000 38% on Margin 12,000 3 36,000 38%
Fixed Fixed
Cost 24,000 38% Cost 24,000 25%
Net Net
Income 0 0% Income 12,000 13%

Exercise Exercise Price per Percentag

2-5 Units to sold Price per unit Total Percentage Actual: 2-5 Units sold unit Total e
Sales 35,000 50 1,750,000 100% Sales 42,000 50 2,100,000 100%
Variable Variable
Cost 35,000 37.5 1,312,500 75% Cost 42,000 37.5 1,575,000 75%
Contributi Contributi
on Margin 35,000 12.5 437,500 25% on Margin 42,000 12.5 525,000 25%
Fixed Fixed
Cost 437,500 25% Cost 437,500 21%
Net Net
Income 0 0% Income 87,500 4%
Exercise 3:
Percentag Percentag
1. Fixed Cost
20,000 Exercise 3-1 Actual e Break-even e
Variable Cost Ratio to Sales 75% Sales 100,000 100% 80,000 100%

Margin of Safety Ratio 20% Variable Cost 75,000 75% 60,000 75%
Contribution
BESpeso ? 80,000 Margin 25,000 25% 20,000 25%

Sales Revenue ? 100,000 Fixed Cost 20,000 20% 20,000 25%

Net Profit ? 5,000 Net Income 5,000 5% 0 0%

Selling Percentag
price Units Safety e
Sales - - 100,000 100%

Break even
Sales - - 80,000 80%

Margin of Safety - - 20,000 20%

CM% 25% 25%

Net income 5,000 5%

Percentag Percentag
2. Net Profit Ratio
8% Exercise 3-2 Actual e Break-even e
Margin safety ratio 20% Sales 125,000 100% 100,000 100%

Fixed Costs 40,000 Variable Cost 75,000 60% 60,000 60%

Contribution
BES peso ? 100,000 Margin 50,000 40% 40,000 40%

Total variable costs ? 75,000 Fixed Cost 40,000 32% 40,000 40%
Net
income ? 10,000 Net Income 10,000 8% 0 0%

Selling Percentag
price Units Safety e
Sales - - 125,000 100%

Break even
Sales - - 100,000 80%

Margin of Safety - - 25,000 20%

CM% 40% 40.00%

Net income 10,000 8%

Price per Percentag Break- Percentag

3. Net income
30,000 Exercise 3-3 Units sold unit Actual e even e
Fixed Costs 20,000 Sales 8,000 25 200,000 100% 80,000 100%

Contribution Margin ratio 25% Variable Cost 8,000 18.75 150,000 75% 60,000 75%
Units Contribution
Sold 8,000 Margin 8,000 6.25 50,000 25% 20,000 25%

Sales Revenue ? 200,000 Fixed Cost 20,000 10% 20,000 25%

Margin of safety ratio ? 60% Net Income 30,000 15% 0 0%

Unit Variable Cost ? 18.75
Selling Percentag
price Units Safety e
Sales - - 200,000 100%

Break even
Sales - - 80,000 40%

Margin of Safety - - 120,000 60%

CM% 25% 25%

Net income 30,000 15%

Price per Percentag

4. Margin of safety ratio
70% Exercise 3-4 Units sold unit Actual e
Break even sales peso 30,000 Sales 20,000 5 100,000 100%
Selling price 5 Variable Cost 20,000 4 80,000 80%
Contribution
Net profit 14,000 Margin 20,000 1 20,000 20%
Units
Sold ? 20,000 Fixed Cost 6,000 6%
Total Fixed Cost ? 6,000 Net Income 14,000 14%
Total VAriable Cost ? 80,000
Selling Percentag
price Units Safety e
Sales - - 100,000 100%
Break even
Sales - - 30,000 30%
Margin of Safety - - 70,000 70%
CM% 20% 20%
Net income 14,000 14%
 Units to Price per Percentag Percentag
5. Margin of safety ratio
20% Exercise 3-5 sold unit Break-even e Actual e
Contribution margin ratio 40% Sales 20,000 5 100,000 100% 125,000 100%
Fixed Costs 40000 Variable Cost 20,000 3 60,000 60% 75,000 60%
Contribution
Selling price
5 Margin 20,000 2 40,000 40% 50,000 40%
Total sales revenue ? 125,000 Fixed Cost 40,000 40% 40,000 32%
Net
income ? 10,000 Net Income 0 0% 10,000 8%
BESu ? 20,000
Selling Percentag
price Units Safety e
Sales - - 125,000 100%
Break even
Sales - - 100,000 80%
Margin of Safety - - 25,000 20%
CM% 40% 40%
Net income 10,000 8%

Price per Percentag

6. Net profit ratio
25% Exercise 3-6 Units sold unit Actual e
Margin of safety ratio 62.50% Sales - - 300,000 100%
Contribution margin 120,000 Variable Cost - - 180,000 60%
Contribution
Sales revenue
? 300,000 Margin - - 120,000 40%
break even peso sales? 112,500 Fixed Cost 45,000 15%
total fixed cost ? 45,000 Net Income 75,000 25%

Selling Percentag
price Units Safety e
Sales - - 300,000 100%
Break even
Sales - - 112,500 37.50%
Margin of Safety - - 187,500 62.50%
CM% 40% 40.00%
Net income 75,000 25%

Units to Price per Percentag Percentag

7. Fixed cost ratio
12% Exercise 3-7 sold unit Break-even e Actual e
contribution margin ratio 20% Sales 5,000 15 75,000 100% 125,000 100%

BES peso 75,000 Variable Cost 5,000 12 60,000 80% 100,000 80%
Contribution
BESu 5,000 Margin 5,000 3 15,000 20% 25,000 20%
Sales Revenue ? 125,000 Fixed Cost 15,000 20% 15,000 12%
Unit variable cost ? 12 Net Income 0 0% 10,000 8%
Net income ? 10,000
Selling Percentag
price Units Safety e
Sales - - 125,000 100%
Break even
Sales - - 75,000 60%
Margin of Safety - - 50,000 40%
CM% 20% 20%
Net income 10,000 8%

Price per Percentag

8. total contribution margin
14,400 Exercise 3-8 Units sold unit Actual e
margin of safety 7,200 Sales - - 72,000 100%
contribution margin ratio 20% Variable Cost - - 57,600 80%
Contribution
BESpeso ? 64,800 Margin - - 14,400 20%
Total fixed costs ? 12,960 Fixed Cost 12,960 18%
Net income ? 1,440 Net Income 1,440 2%

Selling Percentag
price Units Safety e
Sales - - 72,000 100%
Break even
Sales - - 64,800 90%
Margin of Safety - - 7,200 10%
CM% 20% 20.00%
Net income 1,440 2%