CVP PROBLEMS

PROBLEMS:
1
. Green Corporation expects to sell
3,000 plants a month. Its
operations manager estimated the
following monthly costs:
Variable costs P 7,500
Fixed costs 15,000
What sales price per plant does she
need to achieve to begin making a
profit if she sells the
estimated number of plants per
month?
A.P7.51 C.P5.00
B.P7.50 D.P2.50 Bobadilla
2
. An organization's break-even
point is 4,000 units at a sales price
of P50 per unit, variable cost
of P30 per unit, and total fixed
costs of P80,000. If the company
sells 500 additional units, by
how much will its profit increase?
A.P25,000 C.P10,000
B.P15,000 D.P12,000 Bobadilla
3
. The Red Lions Brotherhood is
planning its annual Riverboat
Extravaganza. The Extravaganza
committee has assembled the
following expected costs for the
event:
Dinner per person P 70
Programs and souvenir per person
30
Orchestra 15,000
Tickets and advertising 7,000
Riverboat rental 48,000
Floor show and strolling
entertainment 10,000
The committee members would
like to charge P300 per person for
the evening’s activities.
Assume that only 250 persons are
expected to attend the
extravaganza, what ticket price
must
be charged to breakeven?
A.P420 C.P320
B.P350 D.P390 Bobadilla
4
. Consider the following:
Fixed expenses P78,000
Unit contribution margin 12
Target net profit 42,000
How many unit sales are required
to earn the target net profit?
A.15,000 units C.12,800 units
B.10,000 units D.20,000 units
Bobadilla
5
. Carribean Company produces a
product that sells for P60. The
variable manufacturing costs
are P30 per unit. The fixed
manufacturing cost is P10 per unit
based on the current level of
activity, and fixed selling and
administrative costs are P8 per
unit. A selling commission of 10%
of the selling price is paid on each
unit sold.
The contribution margin per unit
is:
A.P24. C.P30.
B.P36. D.P54. Bobadilla
6
. Seal Yard Ornaments sells lawn
ornaments for P15 each. Seal's
contribution margin ratio is
40%. Fixed costs are P32,000.
Should fixed costs increase 30%,
how many additional units
will Seal have to produce and sell
in order to generate the same net
profit as under the current
conditions?
A.1,600. C.6,933.
B.5,333. D.1,067. Bobadilla
7
. At a break-even point of 5,000
units sold, variable expenses were
P10,000 and fixed expenses
were P50,000. The profit from the
5,001st unit would be?
A.P10 C.P15
B.P50 D.P12 Bobadilla
8
. Galactica Company has fixed
costs of P100,000 and breakeven
sales of P800,000. Based on
this relationship, what is its
projected profit at P1,200,000
sales?
A.P 50,000 C.P150,000
B.P200,000 D.P400,000 Bobadilla
9
. The sales price per unit will
increase from P32 to P40. The
variable cost per unit will remain
at
P24, and the fixed costs will
remain unchanged at P400,000.
How many fewer units must be
sold to break-even at the new sales
price of P40 per unit?
A.25,000 C.10,000
B.2,500 D.12,500 Bobadilla
PROBLEMS:
1
. Green Corporation expects to sell
3,000 plants a month. Its
operations manager estimated the
following monthly costs:
Variable costs P 7,500
Fixed costs 15,000
What sales price per plant does she
need to achieve to begin making a
profit if she sells the
estimated number of plants per
month?
A.P7.51 C.P5.00
B.P7.50 D.P2.50 Bobadilla
2
. An organization's break-even
point is 4,000 units at a sales price
of P50 per unit, variable cost
of P30 per unit, and total fixed
costs of P80,000. If the company
sells 500 additional units, by
how much will its profit increase?
A.P25,000 C.P10,000
B.P15,000 D.P12,000 Bobadilla
3
. The Red Lions Brotherhood is
planning its annual Riverboat
Extravaganza. The Extravaganza
committee has assembled the
following expected costs for the
event:
Dinner per person P 70
Programs and souvenir per person
30
Orchestra 15,000
Tickets and advertising 7,000
Riverboat rental 48,000
Floor show and strolling
entertainment 10,000
The committee members would
like to charge P300 per person for
the evening’s activities.
Assume that only 250 persons are
expected to attend the
extravaganza, what ticket price
must
be charged to breakeven?
A.P420 C.P320
B.P350 D.P390 Bobadilla
4
. Consider the following:
Fixed expenses P78,000
Unit contribution margin 12
Target net profit 42,000
How many unit sales are required
to earn the target net profit?
A.15,000 units C.12,800 units
B.10,000 units D.20,000 units
Bobadilla
5
. Carribean Company produces a
product that sells for P60. The
variable manufacturing costs
are P30 per unit. The fixed
manufacturing cost is P10 per unit
based on the current level of
activity, and fixed selling and
administrative costs are P8 per
unit. A selling commission of 10%
of the selling price is paid on each
unit sold.
The contribution margin per unit
is:
A.P24. C.P30.
B.P36. D.P54. Bobadilla
6
. Seal Yard Ornaments sells lawn
ornaments for P15 each. Seal's
contribution margin ratio is
40%. Fixed costs are P32,000.
Should fixed costs increase 30%,
how many additional units
will Seal have to produce and sell
in order to generate the same net
profit as under the current
conditions?
A.1,600. C.6,933.
B.5,333. D.1,067. Bobadilla
7
. At a break-even point of 5,000
units sold, variable expenses were
P10,000 and fixed expenses
were P50,000. The profit from the
5,001st unit would be?
A.P10 C.P15
B.P50 D.P12 Bobadilla
8
. Galactica Company has fixed
costs of P100,000 and breakeven
sales of P800,000. Based on
this relationship, what is its
projected profit at P1,200,000
sales?
A.P 50,000 C.P150,000
B.P200,000 D.P400,000 Bobadilla
9
. The sales price per unit will
increase from P32 to P40. The
variable cost per unit will remain
at
P24, and the fixed costs will
remain unchanged at P400,000.
How many fewer units must be
sold to break-even at the new sales
price of P40 per unit?
A.25,000 C.10,000
B.2,500 D.12,500 Bobadilla
PROBLEMS:
1
. Green Corporation expects to sell
3,000 plants a month. Its
operations manager estimated the
following monthly costs:
Variable costs P 7,500
Fixed costs 15,000
What sales price per plant does she
need to achieve to begin making a
profit if she sells the
estimated number of plants per
month?
A.P7.51 C.P5.00
B.P7.50 D.P2.50 Bobadilla
2
. An organization's break-even
point is 4,000 units at a sales price
of P50 per unit, variable cost
of P30 per unit, and total fixed
costs of P80,000. If the company
sells 500 additional units, by
how much will its profit increase?
A.P25,000 C.P10,000
B.P15,000 D.P12,000 Bobadilla
3
. The Red Lions Brotherhood is
planning its annual Riverboat
Extravaganza. The Extravaganza
committee has assembled the
following expected costs for the
event:
Dinner per person P 70
Programs and souvenir per person
30
Orchestra 15,000
Tickets and advertising 7,000
Riverboat rental 48,000
Floor show and strolling
entertainment 10,000
The committee members would
like to charge P300 per person for
the evening’s activities.
Assume that only 250 persons are
expected to attend the
extravaganza, what ticket price
must
be charged to breakeven?
A.P420 C.P320
B.P350 D.P390 Bobadilla
4
. Consider the following:
Fixed expenses P78,000
Unit contribution margin 12
Target net profit 42,000
How many unit sales are required
to earn the target net profit?
A.15,000 units C.12,800 units
B.10,000 units D.20,000 units
Bobadilla
5
. Carribean Company produces a
product that sells for P60. The
variable manufacturing costs
are P30 per unit. The fixed
manufacturing cost is P10 per unit
based on the current level of
activity, and fixed selling and
administrative costs are P8 per
unit. A selling commission of 10%
of the selling price is paid on each
unit sold.
The contribution margin per unit
is:
A.P24. C.P30.
B.P36. D.P54. Bobadilla
6
. Seal Yard Ornaments sells lawn
ornaments for P15 each. Seal's
contribution margin ratio is
40%. Fixed costs are P32,000.
Should fixed costs increase 30%,
how many additional units
will Seal have to produce and sell
in order to generate the same net
profit as under the current
conditions?
A.1,600. C.6,933.
B.5,333. D.1,067. Bobadilla
7
. At a break-even point of 5,000
units sold, variable expenses were
P10,000 and fixed expenses
were P50,000. The profit from the
5,001st unit would be?
A.P10 C.P15
B.P50 D.P12 Bobadilla
8
. Galactica Company has fixed
costs of P100,000 and breakeven
sales of P800,000. Based on
this relationship, what is its
projected profit at P1,200,000
sales?
A.P 50,000 C.P150,000
B.P200,000 D.P400,000 Bobadilla
9
. The sales price per unit will
increase from P32 to P40. The
variable cost per unit will remain
at
P24, and the fixed costs will
remain unchanged at P400,000.
How many fewer units must be
sold to break-even at the new sales
price of P40 per unit?
A.25,000 C.10,000
B.2,500 D.12,500 Bobadilla
PROBLEMS:

. Green Corporation expects to sell 3,000 plants a month. Its operations manager estimated the

following monthly costs:

Variable costs P 7,500

Fixed costs 15,000

What sales price per plant does she need to achieve to begin making a profit if she sells the

estimated number of plants per month?

A.P7.51 C.P5.00

B.P7.50 D.P2.50 Bobadilla

2

. An organization's break-even point is 4,000 units at a sales price of P50 per unit, variable cost

of P30 per unit, and total fixed costs of P80,000. If the company sells 500 additional units, by

how much will its profit increase?

A.P25,000 C.P10,000

B.P15,000 D.P12,000 Bobadilla

. The Red Lions Brotherhood is planning its annual Riverboat Extravaganza. The Extravaganza

committee has assembled the following expected costs for the event:

Dinner per person P 70

Programs and souvenir per person 30

Orchestra 15,000

Tickets and advertising 7,000

Riverboat rental 48,000

Floor show and strolling entertainment 10,000

The committee members would like to charge P300 per person for the evening’s activities.

Assume that only 250 persons are expected to attend the extravaganza, what ticket price must

be charged to breakeven?

A.P420 C.P320

B.P350 D.P390 Bobadilla

. Consider the following:

Fixed expenses P78,000

Unit contribution margin 12

Target net profit 42,000

How many unit sales are required to earn the target net profit?

A.15,000 units C.12,800 units

B.10,000 units D.20,000 units Bobadilla

5
. Carribean Company produces a product that sells for P60. The variable manufacturing costs

are P30 per unit. The fixed manufacturing cost is P10 per unit based on the current level of

activity, and fixed selling and administrative costs are P8 per unit. A selling commission of 10%

of the selling price is paid on each unit sold.

The contribution margin per unit is:

A.P24. C.P30.

B.P36. D.P54. Bobadilla

. Seal Yard Ornaments sells lawn ornaments for P15 each. Seal's contribution margin ratio is

40%. Fixed costs are P32,000. Should fixed costs increase 30%, how many additional units

will Seal have to produce and sell in order to generate the same net profit as under the current

conditions?

A.1,600. C.6,933.

B.5,333. D.1,067. Bobadilla

. At a break-even point of 5,000 units sold, variable expenses were P10,000 and fixed expenses

were P50,000. The profit from the 5,001st unit would be?

A.P10 C.P15

B.P50 D.P12 Bobadilla

. Galactica Company has fixed costs of P100,000 and breakeven sales of P800,000. Based on

this relationship, what is its projected profit at P1,200,000 sales?

A.P 50,000 C.P150,000

B.P200,000 D.P400,000 Bobadilla

. The sales price per unit will increase from P32 to P40. The variable cost per unit will remain at

P24, and the fixed costs will remain unchanged at P400,000. How many fewer units must be

sold to break-even at the new sales price of P40 per unit?

A.25,000 C.10,000
B.2,500 D.12,500 Bobadilla

The Hard Company sells widgets. The company breaks even at an annual sales volume of

80,000 units. At an annual sales volume of 100,000 units the company reports a profit of

P220,000. The annual fixed costs for the Hard Company are:

A.P 880,000 C.P 800,000

B.P1,100,000 D.P1,000,000 Bobadilla

11

.Albatross Company has fixed costs of P90,300. At a sales volume of P360,000, return on

sales is 10%; at a P600,000 volume, return on sales is 20%. What is the break-even volume?

A.P225,000 C.P301,000

B.P258,000 D.P240,000 Bobadilla

12

.An entity has fixed costs of P200,000 and variable costs per unit of P6. It plans on selling

40,000 units in the coming year. If the entity pays income taxes on its income at a rate of 40%,

what sales price must the firm use to obtain an after-tax profit of P24,000 on the 40,000 units?

A.P11.60 C.P12.00

B.P11.36 D.P12.50 Bobadilla

13

.The following is the Lux Corporation's contribution format income statement for last month:

Sales P2,000,000

Less variable expenses 1,400,000

Contribution margin 600,000

Less fixed expenses 360,000

Net income P 240,000

The company has no beginning or ending inventories. A total of 40,000 units were produced

and sold last month. What is the company's degree of operating leverage?

A.0.12 C.2.50

B.0.40 D.3.30 Bobadilla

14
.Delmar Company has the opportunity to increase its annual sales by P125,000 by selling to a

new, riskier group of customers. The uncollectible expense is expected to be 10%, and

collection costs will be 10%. The company’s manufacturing and selling expenses are 70% of

sales, and its effective tax rate is 40%. If Delmar were to accept this opportunity, the

company’s after tax profits would increase by

A.P 7,500 C.P12,500

B.P 6,000 D.P15,000 Bobadilla

15

.In 2006 Lucia Company had a net loss of P8,000. The company sells one product with a

selling price of P80 and a variable cost per unit of P60. In 2007, the company would like to

earn a before-tax profit of P40,000. How many additional units must the company sell in 2007

than it sold in 2006? Assume that the tax rate is 40 percent.

A.1,600 C.2,000

B.2,400 D.5,400 Bobadilla

16

.Bulusan Company has sales of P400,000 with variable costs of P300,000, fixed costs of

P120,000, and an operating loss of P20,000. How much increase in sales would Bulusan

need to make in order to achieve a target operating income of 10% of sales?

A.P400,000 C.P500,000

B.P462,000 D.P800,000 Bobadilla

17

.The following data apply to Diva Corporation for the year 2006:

Total variable cost per unit P3.50

Contribution margin/sales 30%

Breakeven sales (present volume) P1,000,000

Diva wants to sell an additional 50,000 units at the same selling price and contribution margin

per unit. By how much can fixed costs increase to generate a gross margin equal to 10% of

the sales value of the additional 50,000 units to be sold?

A.P 50,000 C.P 67,500

B.P 57,500 D.P125,000 Bobadilla

18

.Marsman Company had a margin of safety ratio of 20%, variable costs of 60% of sales, fixed

costs of P240,000, a break-even point of P600,000, and an operating income of P60,000 for

the current year. What are the current year's sales?

A.P 500,000 C.P 750,000

B.P 600,000 D.P 900,000 Bobadilla

19

.Regal, Inc. sells Product M for P5 per unit. The fixed costs are P210,000 and the variable

costs are 60% of the selling price. What would be the amount of sales if Regal is to realize a

profit of 10% of sales?

A.P700,000 C.P525,000

B.P472,500 D.P420,000