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  • Exercise 1

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    Vivian Monteclaro
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    The document provides a company's projected profit statement showing sales of ₱200,000 with variable costs of ₱120,000, resulting in a contribution margin of ₱80,000. After subtracting fixed costs of ₱64,000, the operating income is projected to be ₱16,000. It then asks six questions about calculating figures like contribution margin per unit, break-even points, units and revenue needed to reach different operating income targets, and margin of safety.

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    The document provides a company's projected profit statement showing sales of ₱200,000 with variable costs of ₱120,000, resulting in a contribution margin of ₱80,000. After subtracting fixed costs of ₱64,000, the operating income is projected to be ₱16,000. It then asks six questions about calculating figures like contribution margin per unit, break-even points, units and revenue needed to reach different operating income targets, and margin of safety.

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    © All Rights Reserved
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    30 views1 page

    Exercise 1

    Uploaded by

    Vivian Monteclaro
    The document provides a company's projected profit statement showing sales of ₱200,000 with variable costs of ₱120,000, resulting in a contribution margin of ₱80,000. After subtracting fixed costs of ₱64,000, the operating income is projected to be ₱16,000. It then asks six questions about calculating figures like contribution margin per unit, break-even points, units and revenue needed to reach different operating income targets, and margin of safety.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    A company’s projected profit for the coming year is as follows:

    Sales (@ ₱20) ₱200,000


    Less: Variable costs (@ ₱12) 120,000
    Contribution margin ₱ 80,000
    Less: Fixed costs 64,000
    Operating income ₱ 16,000

    Required
    1. Calculate the contribution margin per unit and the break-even point in number of units.

    2. Calculate the contribution margin ratio and the break-even point in pesos.

    3. How many units must the company sell to earn operating income equal to ₱30,000 before tax?

    4. How much revenue must the company generate to earn operating income equal to ₱20,000?

    5. If the company desires to earn an after-tax profit of 75,000. The income tax rate is 25%. How
    much should sales be?

    6. Compute the margin of safety in units, in pesos, and in percentage form.

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