ACCA107

Exercises, CVP
C. N.Dait

11. Diamond Jim's makes and sells class rings for local schools.
OperaCng informaCon is as follows:

Selling price per ring P 600

Variable cost per ring
Rings and stones P220
Sales commissions 48
Overhead 32
Annual fixed costs
Selling P180,000
AdministraCve 105,000
Manufacturing 60,000

a. What is Diamond Jim's break-even point in rings?

b. What is Diamond Jim's break-even point in sales dollars?
c. What would Diamond Jim's break-even point be if sales commissions increased to P54?
d. What would Diamond Jim's break-even point be if selling expenses decreased by
P6,000?

14. Salina Sports Wear has designed a new athleCc suit. The company plans to produce and sell
30,000 units of the new product in the coming year. Annual fixed costs are $600,000, and
variable costs are 70% of the selling price. If the company wants a pre-tax profit of
$300,000, at what minimum price must it sell its product?

15. Use the informaCon for Hamlet House in Exercise 16 and assume a tax rate for the company
of 35 percent.
a. If Hamlet House wants to earn an a]er-tax profit of $182,000, how many garden
sheds must be sold?
b. How much revenue is needed to yield an a]er-tax profit of 8 percent of revenues
How many garden sheds does this revenue amount represent?

16. Hamlet House makes portable garden sheds that sell for $1,800 each.

Costs are as follows:

Per unit Total
Direct material P800
Direct labor 90
Variable producCon overhead 60
Variable selling and administraCve cost 50
Fixed producCon overhead P200,000
Fixed selling and administraCve 60,000

a. How many garden sheds must the company sell to break even?
b. If Hamlet House's management wants to earn a pre-tax profit of P200,000, how
many garden sheds must be sold?
c. If Hamlet House's management wants to earn a pretax profit of P280,000, how
many garden sheds must be sold?
 ACCA107
Exercises, CVP
C. N.Dait

17. AusCn AutomoCve sells an auto accessory for P180 per unit. The company’s
variable cost per unit is P30 for direct material, P25 per unit for direct labor,
and P17 per unit for overhead. Annual fixed producCon overhead is P37,400, and fixed
selling and administraCve overhead is P25,240.

a. What is the contribuCon margin per unit?

b. What is the contribuCon margin raCo?
c. What is the break-even point in units?
d. Using the contribuCon margin raCo, what is the break-even point in sales dollars?
c. If AusCn AutomoCve wants to earn a pre-tax profit of P51,840, how many units
must the company sell?