BSA 3102

Topic : CVP Analysis MC Prof. Maria Teresa B. De Jesus

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1 - 3 The following budgeted income 7. Winner Corp. sells a product for P 5 per unit.
statement was prepared by Von Corporation: The fixed expenses are P 210,000 and the unit
Sales (100 units at P100) P 10,000 variable expenses are 60% of the selling price.
Cost of goods sold: What sales would be necessary in order for Winger
Corp. to realize a profit of 10% of sales?
Direct labor (variable) P 1,500
a. P700,000 b. P525,000 c. P472,500 d. P420,000
Direct materials 1,400
Variable factory overhead 1,000 8 - 9 Buhay Company manufactures and sells
Fixed factory overhead 500 4,400 Batik handbags in assorted prints. Data of the
Gross margin 5,600 previous year were as follows :
Selling expenses: Selling price P 8.00 Variable cost P 2.00/piece
Net income P 5,850 Breakeven 2 5,000 pieces
Variable 600 For the coming year, the company estimates
Fixed 1,000 the selling price will be P 9.50 per piece, variable
Administrative expenses: costs to manufacture will increase by 25 % and
Variable 500 fixed cost will increase by 10 % . Income tax of 35
Fixed 1,000 3,100 % will not change .
8. What is the selling price per piece that would
Net operating income P 2,500
give the same contribution margin rate as previous
year ? a. P10.00 b. P8.00 c. P 9.50 d. P 10.50
1. How many units would have to be
sold to break even? a. 50 b. 58 c. 68
9. If the sales for the coming year are expected to
d. 75
exceed last year by 1,800 pieces. What is the
expected sales volume for the coming year ?
2. What would the net operating
a. 28,300 b. 27,225 c. 26,500 d. none of these
income be if sales increase by 25%?
a. P 3,125 b. P 3,750 c. P 4,000 d. P 5,000
10 - 11 The Lapitan Marketing Co. is expecting an
increase in Fixed Costs by P78,750 upon moving
3. What would be the sales at the
their place of business to the downtown area.
break-even point if fixed factory overhead increases
Likewise it is anticipating that the selling price per
by
unit and the variable expenses will not change. At
P 1,700?
present, the sales volume necessary to breakeven
a. P 6,700 b. P 8,666 c. 8,400 d. P 9,200
is P750,000 but with the expected increase in fixed
costs, the sales volume necessary to breakeven
4. Dindy, Inc. sells a product for P 10 per unit. The
would go up to P975,000. Based on these
variable expenses are P 6 per unit, and the fixed
projections,
expenses total P 35,000 per period. By how much
10. What is the profit volume ratio of Lapitan?
will net operating income change if sales are
a. 35% b. 40% c. 45% d. None of these
expected to increase by P 40,000?
a. P 16,000 increase c. P 24,000 increase
11. What would the total fixed costs of Lapitan
b. P 5,000 increase d. P 11,000 decrease
Marketing be after the increase of P78,750?
a. P487,500 b. P341,250 c. P262,500 d. P633,750
5-6 Roberts Company has the following data:
Sales……………………... 3,600 units 12. A manufacturer produces a product
Selling price P 50 per unit that sells for P 10 per unit . Variable costs per
Variable expense P 15 per unit unit are P 6 and total fixed costs are 12,000 . at
this selling price , the company earns a profit
Fixed expenses P 40,530 equal to 10% of total dollar sales . By reducing
its selling price to P 9.00 per unit , the manufacturer
5. If the company wants to increase its total can increase its unit sales volume by 25% .
contribution margin by 40%, it will need to increase Assume that there are no taxes and that total fixed
its sales by about: costs and variable costs per unit remain
a. P48,840 b. P50,400 c. P72,000 d. P34,188 unchanged. If the selling price is reduced t P 9.00
per unit, the profit will be
6. . If the company wants its margin of a. P 3,000 b. P 4,000 c. P 5,000 d. P 6,0
safety to equal P 40,000, it will need to sell about:
a. 1,158 units c. 800 units
b. 2,300 units d. 1,958 units
BSA 3102 Prof. Maria Teresa B. De Jesus
Topic : CVP Analysis MC ******************************************************
********************************************************** 17 – 18 Benny Corporation produces only two
13 - 14 The owners of Bougainvilla Supermarket products, Panel and Lapex, which account for 60%
have been looking for ways to improve sales at and 40% of the total sales of the company,
the store. One of the proposals is to have a weekly respectively. Variable costs as a percentage of
raffle with a total prize of P6,000 per week. For sales are 60% and 85% for Panel and Lapex. Total
every P20 worth of goods purchased, a customer fixed costs are P120,000 and no other costs need
shall receive a number ticket for the raffle. The be considered.
variable cost to print a ticket has been estimated at 17. What is Benny’s breakeven point in sales?
one peso (P1.00). Promotions and other fixed a. P 300,000 c. P500,000
costs in connection with the raffle, likewise, have b. P 400,000 d. None of these
been estimated at P5,000 per week. The current
weekly results of operations of Bougainvilla are as 18. Assuming that Benny’s total fixed costs
follows: increase by 25% how much sales would be
Sales P600,000 necessary to generate a net income of P15,000?
Variable Costs 450,000 a. P 550,000 c. P 650,000
Fixed Costs 80,000 b. P 465,000 d. None of these
13. How much is the sales revenue required to
break-even with the raffle? 19. The Childers Company sells widgets . The
a. P320,000 b. P425,000 c. P600,000 d. P455,000 company breaks even at an annual sales volume
of 75,000 units. Actual annual sales volume was
14. If the raffle can increase sales to P1,000,000 100,000, and the company reported a profit of P
per week, how much would be the increase in 200,000 The annual fixed costs for the Childers
operating income? Company are
a. P39,000 b. P109,000 c. P159,000d. P179,000 a. P 800,000 c. P 75,000
b. P 600,000 d. none of the above
15. Marble Company is selling three products,
Product Red, White and Blue. The company sells 20. Two companies produce and sell the same
three units of Red for every unit of Blue and two product in a competitive industry. Thus, the selling
units of White for every unit of Red. Fixed costs are price of the product for each company is the same.
P720,000.00. Contributions margins are: Company 1 has a contribution margin ratio of 40%
P 1.70 per unit of Red and fixed costs of P 25 million . Company 2 is
P 2.00 per unit of White more automated , making its fixed costs 40%
P 2.90 per unit of Blue higher than those of Company 1. Company 2 also
How many units of White would the company has a contribution margin ratio that is 30% greater
sell at breakeven point? than that of Company 1. By comparison, Company
a. 360,000. b. 108,000 c. 72,000 d. 216,000 1 will have the < List A > breakeven point in terms
of dollar sales volume and will have the < List B >
16. The following revenue and costs budgets for peso profit potential once the indifference point in
the two products. Things Inc. sales are made peso sales volume is exceeded.
available: Plastic Things List A List B
Glass Things a. Lower Lesser
Sales Price P 50 P75 b. Lower Greater
Direct Materials (10) (15) c. Higher Lesser
Direct Labor 15) (25) d. Higher Greater
Fixed Overhead (15) (20)
Net income per unit 10 15 21. Tonykin Company is contemplating marketing a
Budgeted Unit Sales 150,000 300,000 new product. Fixed costs will be P 800,000 for
The budgeted unit sales equal the current unit production of 75,000 units or less and P 1,200,000
demand, and total fixed overhead for the year is if production exceeds 75,000 units. The variable
budgeted at P4,875,000. Assume that the cost ratio is 60% for the first 75,000 units. Total
company plans to maintain the same proportional fixed cost will increase to 50% for units in excess of
mix. In numerical calculations, the company 75,000 . If the product is expected to sell at P 25
rounds to the nearest centavos and unit. The total per unit, how many units must Tonykin sell to
number of units things Inc. needs to produce and breakeven ?
sell to break-even is: a. P 120,000 c. P 111,000
a. 102,632 units c. 153,947 units b. P 96,000 d. P 80,000
b. 171,958 units d. 418,455 units