ASSIGNMENT: BREAK EVEN POINT

Problems:
1. The direct labor cost and direct material cost of a certain product are P300
and P400 per unit, respectively. Fixed charges are P100,000 per month and other
variable costs are P100 per unit.
If the product is sold for P1,200 per unit, how many units must be produced and sold to break
even?

2. A certain firm has the capacity to produce 650,000 units of a certain product
per year. At present, it is operating at 62% capacity. The firm’s annual income is
P4,160,000. Annual fixed cost is P1,920,000 and the variable costs are equal to
P3.56 per unit.
a. What is the annual profit or loss?

b. At what volume of sales does the firm break-even?

3. A small shop in Bulacan fabricates threshers for palay producers in the locality. The
shop can produce each thresher at a labor cost of P1,800. The cost of materials for each
unit is P2,500.
The variable costs amount to P650 per unit, while fixed charges incurred per
annum total P69,000. If the portable threshers are sold for P7,800 per unit, how
many units must be produced and sold per annum to break-even? A
4. A shoe manufacturer produces a pair of shoes at a labor cost of P9.00 a pair and
material cost of P8.00 a pair. The fixed charges of the business are P90,000 a month and
the variable cost is P4.00 a pair. If the shoes sell for P30.00 a pair, how many pairs must
be produced each month for the manufacturer to break-even?

5. Compute for the number of blocks that an ice plant must be able to sell per month
to break-even based on the following data:
Cost of electricity per block P20
Tax to be paid per block P2
Real estate tax P3,500/month
Salaries and wages P25,000/month
Others P12,000/month
Selling price of ice 55/block

6. A company produces circuit boards that are used to update computer equipment.
The fixed cost is P3.15M per month and the variable cost is P3,975 per circuit board. The
selling price per unit is p=P11,250-1.5D. Maximum output of the plant is 6,000 units per
month. What demand will maximize the profit for this product?
7. The fixed cost that can be allocated to the production of plywood by Duraboard
Plywood Corporation is P10M per month. The variable cost per thousand board feet is
P6,575. The price charged will be determined by p = P18,0002.5D per thousand board
feet. The profit at the optimal sales volume is closest to:

8. J. A manufacturing enterprise has determined that its revenue for product ZED was
highest when it could produce 2,500 units of ZED per month. Further, profit was also found
to be at a maximum at a production of 2,000 units per month. The company’s monthly fixed
cost for making product ZED was P10,000 and the cost of making 1 unit of ZED was P20
apiece. The lower range of the company’s profitable operation (breakeven point) is at 129
units of product
ZED. What is the higher limit of producing ZED profitably (the other breakeven point?)