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  • CVP Analysis

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    Sherilyn Bunag
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    The document contains information about two companies, Balagtass Lighting Products and Soliare Inc. It provides their sales, costs, contribution margins, break-even points, and degree of operating leverage. For Balagtass, it calculates that breakeven revenue is ₱22.5 million and break-even units are 9,000 each of floor lamps and desk lamps. For Soliare, it determines the contribution margin ratios for door handles and trim kits, calculates a break-even of 16,222 door handles and 32,444 trim kits, and shows the effect of a sales mix change.

    Original Description:

    Computation of CVP analysis to certain problems in cost accounting

    Original Title

    CVP analysis

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    The document contains information about two companies, Balagtass Lighting Products and Soliare Inc. It provides their sales, costs, contribution margins, break-even points, and degree of operating leverage. For Balagtass, it calculates that breakeven revenue is ₱22.5 million and break-even units are 9,000 each of floor lamps and desk lamps. For Soliare, it determines the contribution margin ratios for door handles and trim kits, calculates a break-even of 16,222 door handles and 32,444 trim kits, and shows the effect of a sales mix change.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    6 views6 pages

    CVP Analysis

    Uploaded by

    Sherilyn Bunag
    The document contains information about two companies, Balagtass Lighting Products and Soliare Inc. It provides their sales, costs, contribution margins, break-even points, and degree of operating leverage. For Balagtass, it calculates that breakeven revenue is ₱22.5 million and break-even units are 9,000 each of floor lamps and desk lamps. For Soliare, it determines the contribution margin ratios for door handles and trim kits, calculates a break-even of 16,222 door handles and 32,444 trim kits, and shows the effect of a sales mix change.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 6

    Problem 1

    BALAGTAS LIGHTING PRODUCTS

    Sales ₱ 30,000,000.00
    Total Variable Costs ₱ 20,000,000.00
    Contribution Margin (CM) ₱ 10,000,000.00
    Total Fixed Costs ₱ 7,500,000.00
    Operating Income ₱ 2,500,000.00

    Requirement 1

    Customer Margin Ratio CM ₱ 10,000,000.00


    = = =
    (CMR) Sales ₱ 30,000,000.00
    Fixed Costs ₱ 7,500,000.00
    Breakeven Revenue = = =
    CMR 0.333333

    Requirement 2
    Reveue Units
    Floor Lamps 60% ₱ 18,000,000.00 12000.00
    Desk Lamps 40% ₱ 12,000,000.00 12000.00

    Sales Mix:
    Floor Lamps 12000.00 1.00
    Desk Lamps 12000.00 1.00

    Product Price Unit Variable Cost


    Floor Lamps ₱ 1,500.00 ₱ 1,000.00
    Desk Lamps ₱ 1,000.00 ₱ 666.67
    Package Total

    Fixed Costs ₱ 7,500,000.00


    Break-even Packages = = =
    Package CM ₱ 833.33
    Floor Lamps 1.00
    x 9,000.00
    Desk Lamps 1.00

    Requirement 3

    Degree of Operating Contribution Margin ₱ 10,000,000.00


    = = =
    Leverage Operating Income ₱ 2,500,000.00
    Increase of 40% in
    = 40% x 4.0 = 160%
    Revenue

    Problem 2
    SOLIARE INC.
    Given:
    Fixed Cost ₱ 7,300,000.00
    Variable Cost
    Door handle ₱ 450.00
    Trim Kits ₱ 250.00
    Price
    Door handle ₱ 600.00
    Trim Kits ₱ 400.00

    Requirement 1

    Product Price Unit Variable Cost


    Door Handle ₱ 600.00 ₱ 450.00
    Trim Kits ₱ 400.00 ₱ 250.00

    Door Handle
    Contribution Margin Ratio CM ₱ 150.00
    = = =
    (CMR) Price ₱ 600.00

    Trim Kits
    Contribution Margin Ratio CM ₱ 150.00
    = = =
    (CMR) Price ₱ 400.00

    Requirement 2
    Door Handle 20000.00
    Trim Kits 40000.00

    Sales Revenue ₱ 28,000,000.00


    Total Variable Costs ₱ 19,000,000.00
    Total Contribution Margin (CM) ₱ 9,000,000.00
    Total Fixed Costs ₱ 7,300,000.00
    Operating Income ₱ 1,700,000.00

    Requirement 3

    Sales Mix
    Door Handles 20000.00 1.00
    Trim Kits 40000.00 2.00

    Product Price Unit Variable Cost


    Door Handles ₱ 600.00 ₱ 450.00
    Trim Kits ₱ 400.00 ₱ 250.00
    Package Total

    Fixed Costs ₱ 7,300,000.00


    Break-even Packages = = =
    Package CM ₱ 450.00
    Door Handles 1.00
    x 16,222.22
    x 16,222.22
    Trim Kit 2.00

    Requirement 4

    Door Handle 0.00


    Trim Kits 70000.00

    Sales Revenue ₱ 28,000,000.00


    Total Variable Costs ₱ 17,500,000.00
    Total Contribution Margin (CM) ₱ 10,500,000.00
    Total Fixed Costs ₱ 5,550,000.00
    Operating Income ₱ 4,950,000.00
    0.333333

    ₱ 22,500,000.00

    Unit CM Sales Mix Package CM


    ₱ 500.00 1.00 ₱ 500.00
    ₱ 333.33 1.00 ₱ 333.33
    ₱ 833.33

    9,000.00

    9,000.00 units of floor lamps


    9,000.00 units of desk lamps

    4.00
    Unit CM
    ₱ 150.00
    ₱ 150.00

    ₱ 0.25

    ₱ 0.38

    Unit CM Sales Mix Package CM


    ₱ 150.00 1.00 ₱ 150.00
    ₱ 150.00 2.00 ₱ 300.00
    ₱ 450.00

    16,222.22

    16,222 units of door handles


    32,444 units of Trim Kit

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