# 1. ABM's breakeven point is 4,000 units at a sales price of P50 per unit, variable cost...

## Question:

1. ABM's breakeven point is 4,000 units at a sales price of P50 per unit, variable cost of P30 per unit, and total fixed costs of P80,000. If ABM sells 500 additional units, by how much will profit increase?

2. HUMSS sells hotdogs for P25 each. The variable costs per hotdog are P10. DSS' fixed costs are currently at P8,000 per month. HUMSS is considering expanding their business to 3 hotdog stands which will increase fixed costs per month by P12,000. If HUMSS expands their business to 3 stands, how may additional hotdogs will need to be sold per year in order to break even? How much is the total CM at the breakeven level of sales for the year?

3. GA earned P50,000 on sales of P400,000. It earned P70,000 on sales of P450,000. How much is the total fixed costs for GA?

4. At a breakeven point of 5,000 units sold, variable expenses were P10,000 and fixed expenses were P50,000. How much is the profit from the 5,001st unit sold?

5. STEM has fixed costs of P100,000 and breakeven sales of P800,000. Based on this relationship, what is the projected profit at P1,200,000 sales level?

6. BSCOUT has fixed costs of P90,300. At a sales volume of P360,000, return on sales is 10%; at a P600,000 volume, return on sales is 20%. What is the breakeven peso volume?

7. GO has fixed costs amounting to P200,000 and variable costs per unit of P6. It plans on selling 40,000 units in the year 2015. If GO pays income taxes at a rate of 40%, what sales price must GO use to obtain an after-tax profit of P24,000?

8. GO CM format income statement for last month is as follows:

Sales..................................................................................................................... 2,000,000

Variable Expenses............................................................................................. (1,400,000)

CM.............................................................................................................................. 600,000

Fixed Expenses ...................................................................................................... (360,000)

Net Income.................................................................................................................. 240,000

They have no beginning or ending inventory. A total of 40,000 units were produced and sold last month. What is GO's DOL?

9. In 2013, Ben and Jerry's Ice cream (BJ) had a net loss of P8,000. The company sells one ice cream product at P80 with a variable cost of P60 per unit. In 2014, Ben and Jerry's Ice cream would like to earn a before-tax profit of P40,000. How many additional units must Ben and Jerry's Ice cream sell in 2014 than it sold in 2013? Assume a 40% tax rate.

10. Brother, Inc. had a margin of safety ratio of 20%, variable costs of 60% of sales, fixed costs of 240,000, a breakeven point of P600,000, and an operating income of P60,000 for 2014. How much is the 2014 sales in pesos?

11. At a sales volume level of 2,250 units, ANP's contribution margin is 1½ of the fixed costs of P36,000. CM is 30%. How much peso sales should ANP sell to earn 10% of sales? How much is the breakeven level in peso sales?

12. Information containing the 2014 projections for KMLS is as follows:

Net sales of P3,000,000

Fixed costs of P800,000

Variable cost: P.65 increase in cost of sales for each peso increase in net sales

*How much is the projected cost of goods sold for 2014?*

13. Nestle sells biscuits for P5 per unit. The fixed costs are P210,000 and the variable costs are 45% of the selling price. What would be the amount of sales if Nestle were to realize a profit of 15% of sales?

14. Tifanny Co. is a manufacturer of its only one product line of power tools. It had sales of P400,000 for 2014 with a CM ratio of 20%. Its margin of safety ratio was 10%. What is Tifanny Co.'s fixed costs?

15. Rolex manufactures a line of ladies' watch which are sold through retail chains. Each watch is sold for P1500; the fixed costs are P3,600,000 for 30,000 watches or less; variable cost is P900 per watch. What is Rolex's DOL at 12,000 watches?

16. Terry Mobile, Inc. reported the following information for the sales of their only product, Terry phones:

Total Per Unit

Sales P31,500,000 P4,500

Variable expenses 9,450,000 1,350

Contribution margin 22,050,000 P3,150

Fixed expenses 13,000,000

Net operating income P9,050,000

Terry Mobile would like to increase their selling price by P500 per unit, and feel that this will decrease sales volume by 10%. Should Touch Street increase the price, and what will the effect be on net operating income?

17. Product Y sells for P15 per unit, and has related variable expenses of P9 per unit. Fixed expenses total P300,000 per year. How many units of Product Y must be sold each year to yield an annual profit of P90,000?

18. Emil Corporation produces and sells a single product, super pen. Data concerning that product appear below:

Selling price per unit.................................................................................................. $240.00

Variable expense per unit............................................................................................. $81.60

Fixed expense per month......................................................................................... $997,920

How many units must the company sell in the year 2014 to get a monthly target profit of $44,000?

19. Samsung Corporation sells a product for P240 per unit. The product's current sales are 41,300 units and its break-even sales are 36,757 units. What is their margin of safety in pesos?

20. Aligs Co. budgets its total production costs at $220,000 for 75,000 units of output and $275,000 for 100,000 units of output. Since additional facilities are needed to produce 100,000 units, fixed costs are budgeted at 20% more than for 75,000 units. What is Aligs' budgeted variable cost per unit of output?

**Related Book For**

## Financial and Managerial Accounting

ISBN: 978-1285078571

12th edition

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac