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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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401 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

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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