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Required: A. Break-Even Point in Units BEP in Units : Total Cost CM Per Unit

XYZ Company plans to introduce a new product in August. The document provides information on selling price, variable costs, fixed costs, and units produced for the new product. It then calculates the break-even point in units and pesos as 12,000 units and P432,000 respectively. The margin of safety is determined to be 3,000 units or P108,000. To earn a profit of P12,000, the desired sales needed are 14,000 units or P504,000.

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544 views3 pages

Required: A. Break-Even Point in Units BEP in Units : Total Cost CM Per Unit

XYZ Company plans to introduce a new product in August. The document provides information on selling price, variable costs, fixed costs, and units produced for the new product. It then calculates the break-even point in units and pesos as 12,000 units and P432,000 respectively. The margin of safety is determined to be 3,000 units or P108,000. To earn a profit of P12,000, the desired sales needed are 14,000 units or P504,000.

Uploaded by

arisu
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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XYZ Company plans to introduce a new product in August.

Information on selling price and

related costs for the new product is shown below:

Selling price per unit P36.00


Variable cost per unit:
Direct materials 15.00
Direct labor 9.00
Manufacturing overhead 4.00
Sales commission 2.00
Monthly fixed costs:
Manufacturing overhead P40,000
Administrative cost 32,000
Actual units produced 15,000

Required:

a. Break-even point in units

¿
BEP in units = Total ¿ cost CM per unit

40,000+32,000
=
36−(15+9+ 4+2)

72,000
= 36−30

72,000
=
6

= 12,000 units

b. Break-even point in pesos


¿
BEP in pesos = Total ¿ cost CM ratio

72,000
=
6

= 12,000 x 36

= P432,000

c. Margin of safety in units

MS in units = Sales in units – BEP in units

= 15,000 – 12,000

= 3,000 units

d. Margin of safety in pesos

MS in units = Sales in pesos – BEP in pesos

= (36 x 15,000) – 432,000

= 540,000 – 432,000

= P108,000

e. Desired sales in units to earn a profit of P12,000

¿
Desired sales in units = Total ¿ Cost + Target Profit CM per unit

72,000+ 12,000
=
6
84,000
=
6

= 14,000 units

f. Desired sales in pesos to earn a profit of P12,000

¿
Desired sales in pesos = Total ¿ Cost+ Target Profit CM ratio

72,000+ 12,000
=
6

84,000
=
6

= 14,000 x 36

= P504,000

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