23.

Unit Sales Price-500

Unit Variable Costs- 300
Total Fixed Costs- 8,000,000
Sales Volume- 75,000 units

1.) Based on the original data, determine the CMR, BEP in pesos, profit, MSR, and the DOL.

Solutions and Discussions:

Unit Contribution Margin (UCM), contribution Margin Rate (CMR), and Variable Cost Rate
If: CM= Sales- Variable Costs
And: UCM= USP- UVC
Then: The unit contribution margin is 200 (500-300)
The contribution margin rate is 40% (200/500)
The variable cost rate is 60% (300/500)

Units Unit Prices Amount Percentage

Sales 75,000 500 37,500,000 100%
Less: Variable Costs 75,000 300 22,500,000 60%
Contribution Margin 75,000 200 15,000,000 40%
Less: Fixed Costs 8,000,000
Profit 7,000,000

BEP (in pesos)- 8,000,000/40%= 20,000,000

BEP (in units)- 8,000,000/200= 40,000 units

MSR
Units Amount Rate
Budgeted Sales 75,000 37,500,000 100%
(75,000 x 500)
Less: Breakeven Sales 40,000 20,000,000 58%
Margin of safety 35,000 15,750,000 42%

PROFIT
Profit= margin of safety x CM rate
= 15,750,000 x 42 %
= 6,615,000
DOL
Contribution margin (75,000 x200) 15,000,000
Fixed Costs 8,000,000
EBIT = 7,000,000
DOL- 15,000,000/ 7,000,000= 2.14

2.)
Changes US UVC TFC QS CMR BEPP P MSR DOL
P
1.A 500 300 8 m 75,000 40% 20,000,000 6,615,000 42% 2.14
2. A USP 425 300 8m 75,000 29.41% 27,201,632.1 1,375,000 14.66 6.82
decrease 0 %
by 15%
2. B UVC 500 270 8m 75,000 46% 17,391,304.3 9,250,000 53.62 1.86
decrease 5 %
by 10%
2. C TFC 500 300 7. 2 75,000 40% 18,000,000 7,800,000 52% 1.92
decrease m
by
80,000
2.D QS 500 300 8m 65,000 40% 20,000,000 5,000,000 38.46 2.6
decrease %
by
10,000
2. E 550 270 11.2 100,00 50.91% 21,999,607.1 16,800,000 60% 1.67
USP m 0 5
increases
by 50,
UVC
decrease
by 10%
TFC by
4%
US
increases
to
100,000
25. BEP, indifference point.

DOL= Percentage in EBIT 200

Percentage in Sales (120)
P 80

Contribution Margin (10,000 units x 80) = 800,000

Fixed Cost (400,000)
EBIT 400,000

DOL= 800,000
400,000
=2

B.
Sales 2,000,000
Less: VC (1,200,000)
Less: FC (-1,200,000)
Profit 2,000,000

C.
Sales 3,600,000
Less: VC (1,200,000)
Less: FC (400,000)
Profit 2,000,000
D.
Sales 2,000,000
Less: VC (800,000)
Less: FC (400,000)
Profit 800,000

E.
Sales 3,880,000
Less: VC (1,440,000)
Less: FC (440,000)
Profit 2,000,000
F.
Sales 3,640,000
Less: VC (1,200,000)
Less: FC (440,000)
 Profit 2,000,000

25.

Capital Intensive Labor Intensive

Fixed FOH 2,440,000 1,320,000
Incremental Exp. 500,000 500,000
T. Fixed Cost 1,940,000 820,000

SELLING PRICE 30 30
DM 5 5.6
DL 6 7.2
NFO 3 4.8
Selling Exp. 2 2
CM 16 19.6
14 10.4

TFC 1,940,000 820,000

CM 14 10.4
=138,571.43 =78,846.15

B.

16x + 1,940,000 = 19.6x + 820,000

36x = 1,120,000
36x 36
X = 311111.11