Question

Kindly answer the following questions in each of the following independent questions:a. Hess Inc. sells a single product with a contribution margin of P12 per unit and fixed costs of P74,400 and sales for the current year of P100,000. How much is the Hess‟ breakeven point?

b. Hartley Inc. has one product with a selling price per unit of P200, the unit variable cost is P75, and the total monthly fixed costs are P300,000. How much is the Hartley‟s contribution margin ratio?
c. Forms Inc. wants to sell a sufficient quantity of products to earn a profit of P40,000. If the unit sales price is P10, unit variable cost is P8, and total fixed costs are P80,000, how many units must be sold to earn the target profit?
d. How much peso sales are required to earn a target income of P80,000 if total fixed costs are P100,000 and the contribution margin ratio is 40%?

Answer 1

a

	Break even point
a	Contribution per unit	12.00
b	Fixed costs	74,400
c=b/a	BEP units	6,200.00
d	Selling price	20.00
e= c*d	BEP sales	124,000

b

	Contribution margin ratio
Ref	Particulars	Amount
a	Sales revenue	200
b	Contribution	125
c=b/a *100	Contribution margin ratio	62.50%

c

	Required sales
Ref	Particulars	Amount
a	Contribution per unit	2.00
b	Required contribution	120,000
c=b/a	Required sales units	60,000.00
d	Selling price per unit	10
e= c*d	Required sales	600,000

d

Required contribution = 100,000 + 80,000 = 180,000

Required sales = 180,000/40% = 450,000