B.

FVR Company

USP = ( 40 +10 + 15 + 14.50) + 15% ( 400,000 )

150,000
1- (.15 x .35 )
= P 84.33

C. ADM Company
Computation of variable and Fixed cost Components :
FACTORY OVERHEAD
Variable ( 80% x 250,000 ) 200,000
Fixed 50,000
Selling and administrative
Variable ( 90% x 50,000 ) 45,000
Fixed 5,000
Computation of total costs :
Materials ( 85,000/200,000) .425
Labor ( 100,000/200,000 .50
Variable overhead 200,000/200,000 1.00
Variable selling 45,000/200,000 .225
Total variable cost 2.15
X Expected sales in units s 180,000
Total variable costs 387,000
Add : Fixed costs 55,000
Total costs 442,000

USP = 442,000 + (.15 x 60,000)

180,000 units

= P2.96

2. P 3.12

E. Sey Company

250,000 + ( 30%) x 500,000

20,000
= P20.00 20/.94 22.22
2. 250,000 + (.3 x x 500,000
20,000 u
1- ( .3 x .2 )

= P21.28 21.28/.94 23.64

 Practice

Direct materials 1.00

Direct labor 1.20
Variable overhead . 80
Fixed overhead .50
Variable selling 1.50
Fixed selling .90
Required :
Determine the selling price if
1. Mark up is 50% of CC. 7.15
2. 40% based on full production costs7.30
3. 45% based on variable cost7. 25
4. 30% based on full costs 7.67
5. 35% based on variable costs 7.475
6. 60 % based on prime costs 7.22
7. The company desires to enter a foreign market. An order of 10,000 units is sought. It is
expected that selling cost for this order amounts to P.75 per unit but the fixed costs of
obtaining the contract will be P4,000. Determine the break even price. 4.15

B. Variable raw materials cost 75.00

Direct labor cost 45.00
Fixed annual overhead 450,000
Mark up is 10% on full cost.
1. If the company’s selling potential is 200,000 units, What is the unit selling price?
(75 + 45 +2.25) x1.1 = 134.48
2. . If the company’s pricing policy is changed to 20% based on full cost and its selling potential is
increased by 300,000 units with a corresponding increase in fixed annual expenses to P600,000,
what is the unit selling price to be set up ?
( 75 + 45 + 1.2 ) X 1.2 = 145.44