Statement 1.

If fixed expenses doubled, the break-even point in units would double and the break-even point in peso would be cut in half.

For example:
Sales Price P100
VC per Unit P40
CM per Unit P60 60%

FC P100,000 doubled P200,000

BEP in units
P100,000/60 1,666 units P200,000/60 3,333 units

BEP in peso
P100,000/60% P166,667 P200,000/60% P333,333

FALSE.

Statement 2.
An increase in sales price would cause a decrease in the break even point.

For example:
Sales Price P100 increase P120
VC per Unit P40 P40
CM per Unit P60 60% P80 66.66%

FC P100,000

BEP in units
P100,000/60 1,666 units P100,000/80 1,250 units

BEP in peso
P100,000/60% P166,667 P100,000/66.66% P150,000

TRUE.
If fixed expenses were doubled and contribution margin per unit was cut in half, then the break-even point would:

For example:
Sales Price P100
VC per Unit P40
CM per Unit P60 cut in half P30

FC P100,000 double P200,000

BEP in units
P100,000/60 1,667 units P200,000/30 6,667 units (1,667x4)

QUADRUPLE.
CM per unit
Sales Price 40
VC per unit 22 + (40x5%) 24
16

BEP in units
P9,331,200/16 583,200 units
Revenues P300,000 24,000 units sold P12.50
VC 180,000 180,000/24,000 P7.50
CM 120,000 P5.00
FC 160,000 SQUEEZE
Loss (P40,000)

BEP in units
P160,000/5 32,000

Current units sold 24,000

Addl units to break-even 8,000 SQUEEZE
BEP in units 32,000
If sales price per unit is P48 and total fixed costs is P67,500 and the break-even volume in peso sales is P270,000, then the unit variable cost is:

BEP in peso
67,500/? 270,000
CM ratio 25% (67,500/270,000)

Sales price 48 100%

VC 36 75%
CM 12 25%
Avila Inc. produces pliers. Each pair of pliers sells for P8. Variable cost per unit total P5.6, of which P2.5 is for direct materials and P2.1 is for direct labor.
If the break-even volume in peso is P578,400, then the total fixed costs for the period must be:

Sales price 8
VC 5.6
CM 2.4 30%

BEP in peso
?/30% P578,400

Fixed cost 578,400x40% P173,520

Selling price 90 94
VC 50 50
CM 40 44

BEP in units
50,000/40 1,250 units

Fixed costs P50,000 with increase of 10% P55,000

BEP in units
55,000/? 1,250 units

CM per unit 44
A manufacturer produces a product that sells for P10 per unit. The variable costs per unit are P6 and total fixed costs are P12,000. At this selling price, the company earns a profit e
By reducing its selling price to P9 per unit, the manufacturer can increase its unit sales volume by 25%.
Assume that there are no taxes and that total fixed costs and variable costs per unit remain unchanged. If the selling price were reduced to P9 per unit, the profit would be

Selling Price 10 100% 40,000 (12,000x30%) 4,000 units sold (4,000x1.25) 5,000 units sold if the selling price is P
VC 6 60%
CM 4 40% Selling Price
FC 12,000 30% VC
Profit ? 10% CM
FC
Profit
the company earns a profit equal to 10% of total peso sales.

he profit would be

sold if the selling price is P9.00

9 45,000
6 30,000
4 15,000
12,000 12,000
? 3,000
Last year, the marginal contribution rate of Balanon Company was 30%.
This year, fixed costs are expected to be P120,00, the same as last year, and the sales are forecasted at P550,000 a 10% increase over last year.
For the company to increase income by P15,000 in the coming year, the marginal contribution rate must be

Last Year Current Year

Sales 500,000 550,000 10% increase
VC
CM 150,000 30% 165,000 30% (165,000/550,000)
FC 120,000 120,000
Profit 30,000 45,000 increase of P15,000
 Last Year (50,000 units)
Sales 850,000 17 *CM per unit does not change regardless of changes in volume of sales.
VC 185,000 3.7
CM 665,000 13.3
FC 510,000
Profit 155,000
If total fixed cost is P420,000, contribution margin per unit is P6.75, tax rate is 40%, and the number of units to be sold is 130,000, then the after-tax net income will be:

CM per unit 6.75

Units sold 130,000
CM 877,500
FC 420,000
Profit 457,500
Tax 183,000 (457,500x40%)
After-tax NI 274,500
t income will be:
The Bejasa Company is planning to produce two products, Bej and Asa. Bejasa is planning to sell 100,000 units of Bej at P4 a unit and 200,000 units of Asa at P3 per unit.
Variable costs are 70% of sales for Bej and 80% of sales for Asa. In order to realize a total profit of P160,000, what must the total fixed costs be?

Sales 400,000 600,000 1,000,000

CM ratio 30% 20%
CM 120,000 120,000 240,000
FC 80,000 SQUEEZE
Profit 160,000
f Asa at P3 per unit.
Assuming a constant mix of 3 units of X for every 1 unit of Y, a selling price of P18 for X and P24 for Y,
variable cost per unit of P12 for X and P14 for Y, and total fixed costs of P89,600, the break-even point in units would be:

X Y X:Y 3:1
Sales price 18 24
VC 12 14
CM 6 3/4 4.5 10 1/4 2.5 7 Total WA CM

BEP in units
89,600/7 12,800

X 3 9,600
Y 1 3,200
4 12,800
 A B A:B 3:1
Sales price 5 6
VC 3 5
CM 2 3/4 1.5 1 1/4 0.25 1.75 Total WA CM

BEP in units
280,000/1.75 160,000 units

A 3 120,000
B 1 40,000 P6.00 P240,000
4 160,000
 Y Z Y:Z 60:40
Sales price 120 500
VC 70 200
CM 50 60% 30 300 40% 120 150 Total WA CM

BEP in units
300,000/150 2,000 units

Y 60% 1,200 120 144,000

Z 40% 800 500 400,000
100% 2,000 P544,000