MIDTERM PERFORMANCE TASK

Guide Questions:
I. COSTS (Raw Materials):
a) What raw materials are needed?
-Coconut water, brown sugar, refined sugar, candy sugar, brewing yeast, cinnamon,
cardamom, cloves, and calamansi

b) How many materials are needed to create one product? (In g, L, unit quantity)
-Coconut water (3L), brown sugar (0.25 kg), refined sugar (0.25 kg), brewing yeast (5 g),
cinnamon (1 stick), cardamom (8 pods), cloves (6), and calamansi (6)

c) Determine the cost of each raw material needed per product unit.
-Coconut water: P100/L
-Brown sugar: P28 /0.5 kg
-Refined sugar: P26 /0.5 kg
-Brewing yeast: P26 /g
-Cinnamon: P1.58 /1g
-Cardamom: P7 /pod
-Cloves: P13/piece
-Calamansi: P10/ 6 pieces (5 pesos for 3 pcs)

d) What then will be the function model to represent the product cost per unit?
- x = cost of raw materials Function will be: C(x) = (x) x (a)
- a = amount of product needed
 Raw Material Function Total
Coconut water C(x)= P100 x 3L P300
Brown sugar C(x)= P28 x 0.25kg (1 pack) P7
Refined Sugar C(x)= P26 x 0.25kg (1 pack) P6.5
Brewing yeast C(x)= P26 x 5g P130
Cinnamon C(x)= P1.58 x 2g P3.16
Cardamom C(x)= P7 x 8 P56
Cloves C(x)= P13 x 6 P26
Calamansi C(x)= P5 x 2 P10
TOTAL: P538.66

So we divide P538.66 by 3 in order to determine the cost of the product per liter since
we want to sell 1 L bottles instead of the whole 3 L, thus the cost per unit is P179.55.

II. REVENUE:
a) Given the cost per unit, what will be a good mark-up price (per unit) to determine the
revenue and not get a break-even point? Justify and cite your sources/ references.

Product to be sold: Coconut wine (1 Liter Bottles)

Desired Profit Margin: 20%
 Markup price = P179.55 x (1+0.20) = P215.46
Final Markup price = P215 per liter of coconut wine

This means that we will sell each liter of coconut wine for P215 and we will earn 20% profit
which we can use to determine the revenue.

c) Make a mathematical model to represent the revenue.

Mathematical model:
R = q x mp
Where:
● q = quantity sold
● mp = markup price
● R = revenue

This formula will give us the total revenue generated by selling a certain amount of our product
at the specified markup price.

III. PROFIT:
a) How to determine profit?
-To determine the profit, we must subtract the markup price by the cost per unit and then
multiply it with the quantity sold.

b) Using the information above, represent the function model for profit.
-P(q) = (mp - x) * q
 Where:
P(q) = profit
mp = markup price
x = cost per unit
q = quantity sold

c) What will be the profit value for the break-even point? How about the revenue value?
- If the break-even point is where our profit covers all our costs for making our product
then the profit value must be 0.
- The revenue value will be equal to the total cost we spent to produce the product and sell
the quantity of units required to break even. This means that the total revenue should be
equal to the total cost.

IV. Solving:
If you are to produce 100 units of your product:
a) How much will the total product cost?
-Since the cost per unit is P179.55 we just need to multiply that by 100 to get the total cost to
produce 100 units of coconut wine. Keep in mind that the cost per unit is only for 1 L of our
product.

Total product cost = P179.55 x 100 = P17, 955

Therefore, the total product cost of 100 units sold would be P17, 955
b) How much will be the revenue?
-To get the revenue we must use the (R = q x mp) model and substituting the given variables.

R = 100 x P215 = P21, 500

Thus, the total revenue of 100 units sold would be P21, 500

c) How much will be the projected profit?

- To get the projected profit we must subtract the markup price by the cost per unit and
then multiply it to the quantity sold. Refer to the P(q) = (mp - x) * q function model:
- P(100) = (P215-P179.55) * 100 = P3,545
i) Did you get a positive or negative profit?
- We got a positive profit
net profit
ii) Is this a good profit margin ( revenue x 100)? Why?
- If we calculate to find whether or not we used a good profit margin we do the following:
P3, 545 / P21, 500 = 0.16488 x 100 = 16.488%

- The profit margin we got is considered above average. Because based on the rule of
thumb in the industry, a 5% profit margin is low, 10% profit margin is average, and 20%
is high. Considering ours is in between average and high, we can safely assume that our
profit margin is above average.