Reference no: EM132890878
Question -
A. Compute the number of units or product that must be sold if the company is to break-even in each of the following situations described below:
1. 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.
B. By Using the high-low method, Kimito Hotel estimates the total costs of providing room service meals to amount to P60,000 per month plus 30% of room service revenue.
1. What is the contribution Margin ratio of providing room service meals?
2. What is the break-even point for room service operations in terms of total room service revenue
3. What would you expect to be the total cost of providing room service in a month in which room service revenue amounts to P150,000?
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