Answer to Question #224876 in Accounting for chhhin

Question

The Salesman Company currently sells its product for P15 and has variable costs of P7 per unit. Fixed costs are P50,000. Answer the following questions, consider each independently.

• What is the breakeven point in units?
• If fixed costs rise by 20%, what is the breakeven point in pesos?
• If variable costs decline to P5, what is the breakeven point in units?
• If the selling price per unit declines by 10%, what is the breakeven point in pesos?

Answer 1

What is the breakeven points in units

$Breakeven point= \frac{fixed cost}{construction margin per unit}\\ =\frac{50000}{8} = 6250$

If fixed costs rise by 20%. What is the breakeven point in units pesos?

New fixed cost = 50000

(+) 20% rise = 10000

60000

$Construction margin ratio= \frac {construction margin per unit} {selling price per unit}$

8/15*100= 53.33

Breakeven point in pesos= 60000/53.33*100= 112500

If variable costs decline to p5. What is the breakeven point in units?

Selling price per unit p 15

Variable cost per unit p 5

Construction margin per unit p 10

Breakeven point in units = 50000/10 = 5000