Beta Gamma

Selling price per unit 12 9

Contribution margin per unit 8 4
Sales mix 4 6
Fixed costs 525,000

Products Sales mix CM per unit

Beta 4 8
Gamma 6 4
Total weight average contribution margin

Products Sales Mix Ratio CM Ratio

Beta 0.4 0.67
Gamma 0.6 0.44
Total weight average contribution margin

Sales (P50/unit) 2,500,000

Variable Cost 1,500,000
Contribution margin 1,000,000
Fixed costs 750,000
Profit 250,000

Requirement Answer
Degree of Operating Leverage 4
% Change in profit 80%
Increase (decrease) in profit 200,000

Actual Proposed
Sales (P50/unit) 2,500,000 3,000,000
Variable Cost (P30/unit) 1,500,000 1,800,000
Contribution margin 1,000,000 1,200,000
Fixed costs 750,000 750,000
Profit 250,000 450,000
Weighed CM per unit Combined Units Break-even point in Units
32 9375 37,500
24 9375 56,250
56 Total Sales 93, 750

Weighed CM Ratio Total Sales In Pesos Break-even point in Pesos

0.27 986,842.11 394,736.84
0.26 986,842.11 592,105.26
0.53 Total Sales In Pesos 986,842.10

Difference Change
500,000 20%
300,000
200,000

200,000 80%