NOTE: strictly use algebraic approach. Formulas are given in the photo attached thank you ●●2. Use the algebraic approach. If the Income Statement is:Sales (P50 x 10,000 units)Less:Variable Costs (P20 x 10,000 units)Fixed CostsNet IncomeCompute for the following: 3 points eachContribution Margin RatioBreak-Even Point in SalesBreak-Even Point in UnitsP200,000150.000P500,000350.000P150.000 ALGEBRAIC APPROACHTR = TC Px = F +VxSINGLE-PRODUCT CASE:BEPX = Total Fixed Costs/(Price - Variable Cost)BEPS = Total Fixed Costs(1 - (Variable Cost / Price))ALGEBRAIC APPROACHMULTI-PRODUCT CASE:BEPS =Where:FViΣ[(1– VI)x (Wi)]V = Variable cost per unitP= Price per unitF = Fixed costsW = Total weighted contribution margini = each product

Variable costs are costs which changes with change in activity level. Fixed costs do not change with…

● Use the algebraic approach. If the Income Statement is: ● 2. Sales (P50 x 10,000 units) Less: Variable Costs (P20 x 10,000 units) Fixed Costs Compute for the following: 3 points each Contribution Margin Ratio ● Break-Even Point in Sales Break-Even Point in Units Net Income P200,000 150.000 Sino an P500,000 350.000 P150.000

● Use the algebraic approach. If the Income Statement is: ● 2. Sales (P50 x 10,000 units) Less: Variable Costs (P20 x 10,000 units) Fixed Costs Compute for the following: 3 points each Contribution Margin Ratio ● Break-Even Point in Sales Break-Even Point in Units Net Income P200,000 150.000 Sino an P500,000 350.000 P150.000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 7P

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