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01 Problem Solving - Management Science

This document contains 3 problems involving calculating total cost, total revenue, profit, and break-even volume for different companies. The first problem is for a smartphone manufacturer with monthly fixed costs of ₱20,000,000 and variable costs of ₱35 per unit. At a volume of 3,000,000 units the profit is calculated to be ₱1,075,000,000 with a break-even volume of 54,794 units. The second problem is for a heating installation company with annual fixed costs of ₱120,000 and variable costs of ₱1,000 per unit. At a volume of 57 units the profit is ₱22,500 with a break-

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Millania Thana
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58 views2 pages

01 Problem Solving - Management Science

This document contains 3 problems involving calculating total cost, total revenue, profit, and break-even volume for different companies. The first problem is for a smartphone manufacturer with monthly fixed costs of ₱20,000,000 and variable costs of ₱35 per unit. At a volume of 3,000,000 units the profit is calculated to be ₱1,075,000,000 with a break-even volume of 54,794 units. The second problem is for a heating installation company with annual fixed costs of ₱120,000 and variable costs of ₱1,000 per unit. At a volume of 57 units the profit is ₱22,500 with a break-

Uploaded by

Millania Thana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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01 Problem Solving

1. A smartphone manufacturing company in Asia has monthly fixed costs of ₱20,000,000, and the
variable cost per handset is ₱35. The phones sell for ₱400.
a. For a monthly volume of 3,000,000 units, determine the total cost, total revenue, and profit.
Total Cost =P 20,000,000+ ( 3,000,000 x P35 )
Total Cost =P 20,000,000+ P105,000,000
Total Cost =P 125,000,000

Total Revenue=3,000,000 x P 400


Total Revenue=P 1,200,000,000

Total Profit=( 3,000,000 x P 400 )−P 20,000,000−( 3,000,000 x P 35 )


Total Profit=P 1,200,000,000−P 20,000,000−P 105,000,000
Total Profit=P 1,075,000,000

b. Determine the monthly break-even volume for the smartphone manufacturer.


Cf 20,000,000
υ= = =54,794.52 units
p−C v 400−35

2. A central heating installation company has a fixed annual cost of ₱120,000. The variable costs are
₱1,000 per unit. The company charges ₱3,500 per unit installed.
a. For an annual volume of 57 units, determine the total cost, total revenue, and profit.
Total Cost =P 120,000+ ( 57 x P 1,000 )
Total Cost =P 120,000+ P57,000
Total Cost =P 177,000

Total Revenue=57 x P 3,500


Total Revenue=P 199,500

Total Profit=( 57 x P 3,500 ) −P120,000−( 57 x P 1,000 )


Total Profit=P 199,500−P 120,000−P 57,000
Total Profit=P 22,500

b. Determine the annual break-even volume for this company.


Cf 120,000
υ= = =48units
p−C v 3,500−1,000

3. A paper mill has a monthly fixed cost of ₱253,000, and the variable cost per 90-page folio is
₱0.27. The revenue per folio sold is ₱2.45.
a. For a monthly volume of 2,566 units, determine the total cost, total revenue, and profit.
Total Cost =P 253,000+ ( 2,566 x P 0.27 )
Total Cost =P 253,000+ P 692.82
Total Cost =P 253,692.82

Total Revenue=2,566 x P 2.45


Total Revenue=P 6,286.7

Total Profit=P 6 , 286.70−P 253,692.82


Total Profit=−P 247,406.12

b. Determine the monthly break-even volume for this company.


Cf 253,000
υ= = =1 16 , 055units
p−C v 2 .45−0.27

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