STRAIGHT PROBLEM NO.

ROSE CORPORATION

Sales Volume - 20,000 UNITS

UNITS PESOS RATIO

Sale 15 300,000 100%
Variable Cost 9 180,000 60%
Contribution Margin 6 120,000 40%
Fixed Expense 45,000
Income Before Tax 75,000
Tax Expense ( 30%) 22,500
Income After Tax 52,500

REQUIREMENT A:
WHAT IS THE BREAKEVEN POINT IN UNITS?

BEP UNITS 7,500 UNITS

( 45,000 / 6)
BEP SALES 112,500
( 45,000 / 40%)
OR ( 7,500 * 15) 112,500

REQUIREMENT B:
IF THE COMPANY WANTS A 90,000 BEFORE- TAX PROFIT, HOW MANY UNITS MUST IT SELL?

NEW SALES VOLUME = 22,500

UNITS PESOS RATIO Sales Per Unit

Sale 14 315,000 100% V.C Per Unit
Variable Cost 8 180,000 57% CM. PER unit
Contribution Margin 6 135,000 43%
Fixed Expense 45,000
Income Before Tax 90,000
Tax Expense ( 30%)
Income After Tax

REQUIRED UNITS TO SELL 22,500 UNITS REQUIRED SALES AMOUNT

( 135,000 / 6) ( 135,000 / 43%)

REQUIREMENT C:
IF THE COMPANY WANTS A 84,000 BEFORE-TAX PROFIT, HOW MANY UNITS MUST IT SELL?
SALES VOLUME - 21,500 UNITS

UNITS PESOS RATIO

Sale ### 309,000 100%
Variable Cost ### 180,000 58%
Contribution Margin 6.00 129,000 42%
Fixed Expense 45,000
Income Before Tax 84,000
Tax Expense ( 30%)
Income After Tax

REQUIRED UNITS TO SELL 21,500 UNITS REQUIRED SALES AMOUNT 309,000

( 129,000 / 6) ( 129,000 / 42%)

REQUIREMENT D:
IF THE COMPANY WANTS A 30% BEFORE-TAX RETURN ON SALES, WHAT LEVEL OF SALES, IN PESOS DOES IT NEED?
SALES VOLUME - 12,000
UNITS PESOS RATIO
Sale 15 450,000 100%
Variable Cost 9 270,000 60%
Contribution Margin 6 180,000 40%
Fixed Expense 45,000 10%
Income Before Tax 175,000 30%
Tax Expense ( 30%)
Income After Tax 52,500

REQUIRED SALES AMOUNT 450,000

( 180,000 / 40%)

REQUIREMENT E:
IF THE COMPANY WANTS AN AFTER-TAX RETURN ON SALES OF 15.40%, HOW MANY UNITS MUST IT SELL?
SALES VOLUME - 16,667

UNITS PESOS RATIO

Sale 15.00 250,000 100%
Variable Cost 9.00 150,000 60%
Contribution Margin 6.00 100,000 40%
Fixed Expense 45,000 18%
Income Before Tax 75,000 22% ( .1540/.70)
Tax Expense ( 30%)
Income After Tax

REQUIRED UNITS TO SELL 16,667 REQUIRED SALES AMOUNT 250,000

( 100,000 / 6) ( 100,000 / 40%)

REQUIREMENT F:
IF THE COMPANY WANTS AN AFTER-TAX PROFIT OF 56,000 ON ITS EXPECTED SALES VOLUME OF 20,000 UNITS WHAT PRICE
SALES VOLUME - 20,000

UNITS PESO RATIO SALE PRICE PER UNIT

Sales 15.25 305,000 100% ( 305,000 / 20,000)
Variable Cost 9.00 180,000 59%
C.M 6.25 125,000 41%
Fixed Cost 45,000
Profit Before Tax 80,000 ( 56,000 / 70%)
TAX RATE ( 30%)
Profit After Tax 56,000

REQUIREMENT G:
IF THE COMPANY WANTS A AFTER-TAX RETURN ON SALES OF 26.6% ON ITS EXPECTED SALES VOLUME OF 50,000 UNITS, WH
SALES VOLUME - 50,000 UNITS
UNITS PESO RATIO SALE PRICE PER UNIT
Sales 45.00 2,250,000 100% ( 2,250,000 / 50,000)
Variable Cost 36.00 180,000 60%
C.M 9.00 2,070,000 40%
Fixed Cost 45,000 2%
Profit Before Tax 38% ( .2660 / 70%)
Tax Rate (30%)
Profit After Tax
Sales Per Unit ( 315/22.5) 14
V.C Per Unit ( 180 / 22.5) 8
CM. PER unit 6

315,000
OS DOES IT NEED?
20,000 UNITS WHAT PRICE MUST IT CHARGE?

SALE PRICE PER UNIT 15.25

( 305,000 / 20,000)

LUME OF 50,000 UNITS, WHAT PRICE MUST IT CHARGE?

SALE PRICE PER UNIT 45.00

( 2,250,000 / 50,000)