22 TV sets CD Player Radios
Peso sales component (sales mix) 30% 30% 40%
Contribution Margin Ratio 0.4 0.4 0.6
Weighted CM Ratio per unit 12% (30% x 0.4) 12% 24%
Total Weighted CM ratio per unit 48%
Fixed Costs 2,400,000
Formula: Fixed costs / total weighted CM ratio per unit
2,400,000 / 0.48 Note: 48% is also the same as 0.48
Weighted Sales= 5,000,000
We need to determine the breakdown of 5,000,000 with 3 products ( TV, CD player, Radio)
Answer:
TV sets 1,500,000 5,000,000 x 30%
Php 5,000,000 CD player 1,500,000 5000000 x 30%
Radio 2,000,000 5,000,000 x 40%
40 Fruits Meat Canned products
Peso sales component (sales mix) 20% 30% 50%
Contribution Margin Ratio 0.4 0.5 0.4
Weighted CM Ratio per product 0.08 or 8% 15% 20%
Total weighted CM per unit 43%
Fixed Costs for the month 1,290,000
Formula: Fixed Costs / Total Weighted CM ratio per unit
= 1,290,000 / 43%
Answer: 3,000,000 peso sales
23
This year Next Year
Sales price per unit 25
Variable cost:
Raw materials 11 11
Diect labor 5 5.4
Manufacturing overhead 2.5 2.5
Selling expenses 1.3 1.3
Total VC per unit 19.8
CM per unit 5.2
Annual Fixed costs:
FOH 192,000 192,000
Selling and administrative 276,000 276,000
Total Fixed Costs 468,000
Sabi sa given, ang nagbago lng daw is ung direct labor tumaas daw ng 8% so 5 pesos (this year)
8% then add mo ung 5 pesos or 5 pesos x 108%, pareho lng sagot nian which is 5.4 pesos..
Maliban dun, wala ng nagbago. Since may nag bago ang VC, syempre magbabago din ang CM ng
" this year" at "next year" tingan mo ung nasa table, dati 5.2 pesos then naging 4.8 pesos. Pano
nangyari un? Lumaki kasi ung VC per unit kasi lumaki ung direct labor per unit, remember
5 pesos nagng 5.4 ? Kapag lumaki ung variable cost, liliit ung CM . Kaya from 19.8 to 20.2 ung V
ung CM 5.2 to 4.8
Break Even Point:
Formula: Fixed Costs / CM per unit Note:Napansin nio ba na i
formula? Diba dapat
BEP= Fixed cost / CM ra
KASI KAPAG ANG TINATAN
This Year Next Year IS BREAK EVEN POINT SAL
ANG DENOMINATOR IS CM
468,000 / 5.2 468,000 / 4.8 RATIO PERO KAPAG ANG
TINATANONG IS BREAK EV
BEP units 90,000 units 97,500 units POINT IN UNITS, ANG
FORMULA IS =
FIXED COST / CM PER U
tingnan nio ung sa questio
Ang question is how many units to be sold next year? number 22 & 40 sa prelim
Answer: 97,500 units (next year)
Logic: Mas maganda ba na lumaki ung break even point in units? HINDI, bkt? Kasi ibig sabhin
obligado ka na makabento na 97,500 units para hindi malugi (CM = FC ) kesa this year na 90,000 lng sapat na.
29 Mountaineering Ratio Touring Ratio
Sales price per unit 880 100% 800 100%
VC per unit 528 60% 528 66%
CM per unit 352 40% 272 34%
Fixed costs:
IF you choose Mountaineering Model 3,696,000
IF you choos Touring Model 3,168,000
THE QUESTION IN THE PROBLEM IS AT WHAT TOTAL SALES WILL BE THE TWO PRODUCTS WILL
HAVE THE SAME PROFIT/ LOSS?
What is the formula of total contribution margin?
= Total sales x CM ratio Note: we are looking for total sales
that result to the same profit / loss
What is the formula of net income/ loss?
= total contribution margin- fixed costs
if we will compute the net income of Mountaineering model & Touring Model, formula is?
= ( total sales x CM ratio) - Fixed costs Note: this formula is combin
of two formula above.
The same formula, same Total sales, same profit / loss but different CM ratio
WE know that the formula above will lead to same results, so
Mountaineering Model Touring Model
(Total sales x CM ratio) - Fixed costs is equal to (Total sales x CM ratio) - Fixed costs
so,
(Total sales x CM ratio) - Fixed costs = (Total sales x CM ratio) - Fixed costs
Step 1 LETS DO ALGEBRA !!!!!!!
Let: T = be the Total sales
( T x CM ratio) - FC = ( T x CM ratio) - FC
( T x 40 %) - 3,696,00 = ( T x 34 %) - 3,168,000
0.40 T - Php3,696,000 = 0.34 T - Php3,168,000
Step 2
0.40 T - 0.34 T = 3,696,000 - 3,168,000
0.06 T = 528,000
0.06 T = 528,000
0.06 T 0.06 T
Step 3
0.06 T = 528,000
0.06 T 0.06 T
ANSWER: T = 8,800,000 Note: T stands for Total sa
Tax is irrelevant because i
result to the same total sa
bkt? E diba pareho lang si
profit or loss? Malamang par
lang sila ng TAX. Kaya irre
in the end, after dapat sam
lng sila ng after tax incom
bkt pa kelangan komputin
e pareho lng nmn ng resu
atska total sales lng ang
tinatanong kaya di na kela
Total
100%
s also the same as 0.48
( TV, CD player, Radio)
ung mga rate ay galing
sa peso sales component
sa itaas
anned products Total
100%
Next Year
25
20.2
4.8
468,000
8% so 5 pesos (this year) x
which is 5.4 pesos..
agbabago din ang CM ng
n naging 4.8 pesos. Pano
er unit, remember
from 19.8 to 20.2 ung VC
ote:Napansin nio ba na iba na
ormula? Diba dapat
EP= Fixed cost / CM ratio ?
ASI KAPAG ANG TINATANONG
S BREAK EVEN POINT SALES,
NG DENOMINATOR IS CM
ATIO PERO KAPAG ANG
INATANONG IS BREAK EVEN
OINT IN UNITS, ANG
ORMULA IS =
IXED COST / CM PER UNIT
ngnan nio ung sa questions
umber 22 & 40 sa prelim exam
Kasi ibig sabhin
ar na 90,000 lng sapat na.
TWO PRODUCTS WILL
e looking for total sales
o the same profit / loss
odel, formula is?
ote: this formula is combination
f two formula above.
CM ratio
Touring Model
x CM ratio) - Fixed costs
x CM ratio) - Fixed costs
ote: T stands for Total sales
ax is irrelevant because it still
esult to the same total sales.
kt? E diba pareho lang sila ng
rofit or loss? Malamang pareho
ang sila ng TAX. Kaya irrelevant
n the end, after dapat same
ng sila ng after tax income,
kt pa kelangan komputin un
pareho lng nmn ng result,
tska total sales lng ang
natanong kaya di na kelangan
