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    Exercises in Cost Behavior and CVP Analysis

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    Denver Acenas
    This document contains multiple examples of cost behavior and break-even analysis problems. It provides information on sales volumes, variable costs, fixed costs, contribution margins, and net income for various companies. It then lists requirements to calculate break-even points, margins of safety, and sales volumes required for specific profit targets.

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    Exercises in Cost Behavior and CVP Analysis

    Uploaded by

    Denver Acenas
    17 views3 pages
    This document contains multiple examples of cost behavior and break-even analysis problems. It provides information on sales volumes, variable costs, fixed costs, contribution margins, and net income for various companies. It then lists requirements to calculate break-even points, margins of safety, and sales volumes required for specific profit targets.

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    This document contains multiple examples of cost behavior and break-even analysis problems. It provides information on sales volumes, variable costs, fixed costs, contribution margins, and net income for various companies. It then lists requirements to calculate break-even points, margins of safety, and sales volumes required for specific profit targets.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    17 views3 pages

    Exercises in Cost Behavior and CVP Analysis

    Uploaded by

    Denver Acenas
    This document contains multiple examples of cost behavior and break-even analysis problems. It provides information on sales volumes, variable costs, fixed costs, contribution margins, and net income for various companies. It then lists requirements to calculate break-even points, margins of safety, and sales volumes required for specific profit targets.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    of 3

    EXERCISES IN COST BEHAVIOR AND CVP ANALYSIS

    147-4-3 At a price of P12 the estimated monthly sales of a product is 10,000


    units. Variable costs include manufacturing, P6, and distribution, P1.
    Fixed costs are P24,000 per month.

    Requirments:
    a. Unit contribution margin
    b. Monthly break-even unit sales volume.
    c. Monthly profit.
    d. Monthly margin of safety.

    147-4-4 At a monthly volume of P20,000 a company incurs variable costs of


    P8,000 and fixed costs of P9,000.

    Requirements:

    Determine each of the following:


    a. Variable cost ratio
    b. Contribution margin ratio
    c. Month break-even sales.
    d. Monthly margin of safety.

    147-4-5
    In 20x5 the Durable Art Shop had the following experience:
    Fixed Variable
    Sales P800,000
    Costs:
    Goods sold 300,000
    Labor 160,000 60,000
    Supplies 2,000 5,000
    Utilities 12,000 3,000
    Rent 24,000 0
    Advertising 6,000 2,000
    Miscellaneous 6,000 10,000
    ----------- -----------
    Total costs 210,000 380,000 590,000
    ======= ======= ------------
    Net income P210,000
    ========
    Requirements:
    Determine the following:
    a. Annual break-even sales
    b. Current margin of safety
    c. Annual breal-even sales if management makes a decision that
    increases fixed costs by P52,500.
    149-4-9
    In 20x2 the Tatum Processing Company had the following income
    statement (in Pesos):

    Sales 950,000
    Variable costs:
    Goods sold 420,000
    S&A Expenses 150,000 570,000
    ----------- ----------
    Contribution margin 380,000
    Fixed costs:
    Factory overhead 110,000
    S&A Expenses 80,000 190,000
    ----------- ----------
    Net income before tax 190,000
    Income tax (36%) 68,400
    ----------
    Net income after tax 121,600
    =======
    Requirements:
    a. Break-even point in pesos
    b. Margin of safety in pesos
    c. Break-even in pesos if management makes a decision increases fixed
    costs by P50,000.
    d. Sales required to provide an after-tax net income of P200,000.
    Assume fixed costs are P190,000.

    150-4-10 Oot Manufacturing Company produces a product that is sold for P35
    per unit. Variable and fixed costs are shwon below:

    Variable cost per unit:


    Manufacturing P18
    Selling & Administrative 7
    ------
    Total P25
    ====
    Fixed costs per year:
    Manufacturing P 80,000
    Selling & Administrative 30,000
    -----------
    Total P110,000
    =======
    Last year Oot produced and sold 20,000 units to obtain a net income
    after tax of P49,500.

    Requirements:
    a. Determine the tax rate Oot paid last year.
    b. What unit sales volume is required to provide an after-tax net
    income of P88,000?
    c. If Oot reduces the unit variable cost by P2.50 and increases fixed
    manufacturing costs by P20,000, what unit sales volume is required to
    provide an after - tax income of P88,000
    income of P88,000?
    c. If Oot reduces the unit variable cost by P2.50 and increases fixed
    manufacturing costs by P20,000, what unit sales volume is required to
    provide an after - tax income of P88,000

    153-4-16 Presented are comparative 20x1 and 20x2 income statements for
    Holiday Productsm Inc.
    ---------------------------------------------------------------------------------------
    Holiday Products, Inc.
    Comparative Income Statements
    For the Years Ending December 3, 20x1 and 20x2

    20x1 20x2
    Unit sales 5,000 8,000
    ===== =====
    Sales revenue P65,000 P104,000
    Expenses 75,000 90,000
    ---------- ------------
    Net income (loss) (P10,000) P 14,000
    ======= ========
    Requirements:

    a. Determine the break-even sales in units.


    b. Determine the unit sales volume in (P) and (U) required to earn a
    profit of P10,000.

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