Dagunan, Zeian Kein A.

2nd – BSBA MM

1. Cloud Airlines has a total FC of P2million and a VC of P3 thousand and each seat in the
aircraft sells at P5 thousand. How many seats will Cloud Airlines have to sell in one day
to breakeven?
= 2 million / ( 3,000 – 5,000)
= 1000 seats

2. If Cloud Airlines wants to make a profit of P1 million, how many seats will they have to
sell? FC + Target Profit/ (P-VC)
= 2,000,000 + 1,000,000 / (5,000 – 3,000) = 1500 seats
3. If Cloud Airlines were to sell a total of 2,000 seats, how much profit would it make?
(R - VC) - FC R - revenue or sales

= (10,000,000 – 3,000) – 2,000,000

= 4,000,000 – 2,000,000
= 2,000,000 profit

4. Happy Zone Enterprises sells a product for $80 per unit. The variable cost is P40 per unit,
while fixed costs are P70,000. Determine the (a) break-even point in sales units, and (b)
break-even point if the selling price was increased to P90 per unit.
A. Break – even Point in Sales Units
BP = FC / VCM
= 7,000 / 40 = 1750
The Break – even point in sales units is 1750
B. Break – even Point if the selling price was increased to 90 per unit
BP = FC / VCM
70,000 / 50 = 1,400

The Break – even point if the selling price was increased to P 90 per unit is 1,400.
5. Mc Jolly Company sells a product for P$150 per unit. The variable cost is P60 per unit,
and fixed costs are P270,000. Determine the (a) break-even point in sales units, and (b)
break-even points in sales units if the company desires a target profit of P36,000.

A. Break – even point in sales units

BP = FC / VCM
 = 270,000 / 90 = 3000
= 3,000
The Break – even point in sales units is 3000
B. Break – even points in sales units if the company desires a target profit of P36,000
BP = FC / SP – VC
= 270,000 / 150 – 60

= 3,000

CM = P – VC
= 150 – 60

= 90
Units to achieve target profit = 270,000 + 36,000 / 90
Units to achieve target income = 3,400