1.
Concept introduction:
Net operating income: Net operating income also called NOI, is the revenue from the property, after deducting all the necessary operating expenses. It is basically a calculation which is used to identify the profitability of income generating from investments. The net operating income does not include capital expenditure.
Break-even point: Break-even point is the point at which the costs incurred equals to the revenue earned. That means there is no profit or loss.
Net operating income or loss for the year.
2.
Concept introduction:
Net operating income: Net operating income also called NOI, is the revenue from the property, after deducting all the necessary operating expenses. It is basically a calculation which is used to identify the profitability of income generating from investments. The net operating income does not include capital expenditure.
Break-even point: Break-even point is the point at which the costs incurred equals to the revenue earned. That means there is no profit or loss.
The product’s break-even points in unit sales and dollar sales.
3.
Concept introduction:
Net operating income: Net operating income also called NOI, is the revenue from the property, after deducting all the necessary operating expenses. It is basically a calculation which is used to identify the profitability of income generating from investments. The net operating income does not include capital expenditure.
Break-even point: Break-even point is the point at which the costs incurred equals to the revenue earned. That means there is no profit or loss.
Maximum annual profit that can earn on the product and what sales volume and selling price per unit generate maximum profit.
4.
Concept introduction:
Net operating income: Net operating income also called NOI, is the revenue from the property, after deducting all the necessary operating expenses. It is basically a calculation which is used to identify the profitability of income generating from investments. The net operating income does not include capital expenditure.
Break-even point: Break-even point is the point at which the costs incurred equals to the revenue earned. That means there is no profit or loss.
Break-even point in units and dollar using selling price determined in requirement 3 and the reason for difference between these two break-even points.
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- PROBLEM 5. Austin Company produces a single product. The projected income statement for the coming year follows: Sales (50,000@P40) Variable costs Contribution margin P2,000,000 (1,100,000) 900,000 (765,000) P135,000 Fixed costs Operating income Assume the tax rate is 40 percent. How many units must be sold to earn an after-tax profit of P180,000? 8. What is the selling price that Austin must charge to raise the operating profit by 50 percent based on the given cost structure, still selling 50,000. 7.arrow_forwardPROBLEM 2. Outlast Company's projected profit for the coming year follows: Per Unit Total P200,000 (120,000) 80,000 (64,000) P 16,000 Sales P20 Less: Variable costs (12) Contribution margin Less Fixed expenses P 8 Income Requirements: 1. Compute the breakeven point in units. 2. How many units must be sold to earn a profit of P30,000? 3. Compute the additional profit that Outlast would eari sales were P25,000 more than expected.arrow_forwardQuestion 5 Micol & Co. Ltd sells a single product, baby hamper, with a selling price of $150 and variable costs per baby hamper of $100. The company’s monthly fixed expenses are $200,000. Required: a) What is the company’s break-even point in units? b) What is the company’s margin of safety in dollars, assume sales is expected to be $800,000? c) How many baby hampers will Micol & Co. Ltd need to sell (in sales dollars) in order to realize a target profit of $500,000? d) Construct a contribution margin income statement for the first month (in July) that reflects $2,400,000 in sales revenue for Micol & Co. Ltd. e) Provide two suggestions to Micol & Co. Ltd on how it can increase profit in subsequent months? SHOW YOUR WORKINGarrow_forward
- PROBLEM 5. Austin Company produces a single product. The projected income statement for the coming year follows: Sales (50,000@P40) Variable costs P2,000,000 (1,100,000) 900,000 Contribution margin Fixed costs (765,000) P135,000 Operating income 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10% of sales? 6. Assume the tax rate is 40 percent. How many units must be sold to breakeven? 7. Assume the tax rate is 40 percent. How many units must be sold to earn an after-tax profit of P180,000? 8. What is the selling price that Austin must charge to raise the operating profit by 50 percent based on the given cost structure, still selling 50,000.arrow_forwardbreak-even in each of the following situations described below: Exercise 4-10 Compute the number of units or product that must be soid if the company is to | The fixed cost is P312,000 a year. Each unit sold contributes P6 to the recovery of fixed cost and to profit. 2 The variable cost is equal to 70% of sales revenue. Each unit of product is sold for P20. The fixed costs amount to P420,000 per year. 3. Contribution margin is equal to 28% of the revenue. Each unit of product sells for P50. The fixed cost is P210,000 for the year. 4. A variable cost of P9 per unit of product is equal to 60% of the selling price. The fixed cost for the year amount to P390,000. 5. Each unit of product sold contributes 30% of its revenues to the recovery of fixed cost and to profit. The fixed cost amount to P420,000 for the year, and each product is sold at a price of P10. Exercise 4-11 By using the high-low method, Maricel Hotel Company estimates the total costs of providing room service. meals to amount…arrow_forwardQUESTION 8 Toy Story, Inc., has the capacity to produce 100,000 toys per year but only produces 80,000 toys per year. The sale price is $10, the variable cost is $7 and allocated overhead equals $80,000 per year. Company B offers to buy an additional 18,000 toys but is only willing to pay $5 per toy. What is the additional operating income (loss) of accepting the offer? ENTER NEGATIVE NUMBERS WITH A "-" SIGN. DO NOT USE PARENTHESES. EXAMPLE: -10,000arrow_forward
- PROBLEM 2. Outlast Company's projected profit for the coming year follows: Per Unit Total P200,000 (120,000) 80,000 (64,000) P 16,000 Sales Less: Variable costs P20 (12) P 8 Contribution margin Less Fixed expenses Income 4. Suppose Outlast would like to earn operating income equ to 20 percent of sales revenue. How many units must be sold for this goal to be realized? 5. For the projected level of sales, compute the margin of safety.arrow_forwardPROBLEM 3: The company expected to sell 45,000 units next year with the following results: Sales P900,000 Variable costs 540,000 360,000 150,000 210,000 84,000 P126,000 Contribution margin Fixed costs Income before taxes Income taxes Net income a. If the company wants an after-tax return on sales of 15% on its expected volume of 45,000 units, what price must it charge? a. 19.66 b. 20.44 c. 20.22 d. 22.22arrow_forwardPAGE 1.1 NUBD Co. plans to market a new product. Based on its market studies. It estimates that it can sell 70,000 units in 2021. The selling price per unit is P2.00. Variable cost ratio is 40% of sales. Fixed costs are estimated to be P60,000. A.Compute the break-even point in units. B.Compute the break-even point in sales pesos.arrow_forward
- PROBLEM 4. Cindy, Inc., sells a single product. The company's most recent income statement is given below. Sales (10,000 units) Less variable expenses Contribution margin Less fixed expenses P800,000 ( 440,000) 360,000 (180.000) P180,000 Operating income Requirements: 1. If 2,000 more units are sold, how much increase in profit is expected? 2. If sales volume increases by15 percent compute the new profit. 3. If the firm were able to increase its sales volume by 15 percent without a change in its selling price, variable costs, or fixed costs, would this change the breakeven point?arrow_forwardQuestion 3: Sohar Company's financial information is given in the table below. Sales (OMR) Fixed Costs 405000 Year Variable Costs 2019 90000 225000 2020 450000 120000 240000 Calculate: a) PV ratio, b) B.E.P in units and Sales c) Sales required to earn a profit of OMR 40000.Each year is separate, you should calculate the required values for both years. d) Margin of safety at a profit of OMR 50000 e) Profit when sales are OMR. 200000.arrow_forwardD) Brolin Company sells a single product. The product has a selling price of $50 and variable expenses of 80% of sales. If the company's fixed expenses total $150,000 per year, what is the company's break-even point in sales dollars? per unit $750,000 A) $187,500 B) $15,000 C) $3,750 D) Page 2 of 4 O 48°F Sunny re to searcharrow_forward