Chapter 3-Cost-Volume-Profit (CVP) Analysis

3-4 Multiple Choice (Theories)

1. Assumptions underlying cost-volume-profit analysis include all of the following

except:
A. All costs can be divided into fixed and variable elements.
B. Total costs are directly proportional to volume over the relevant range.
C. Selling prices are to be unchanged.
D. Volume is the only relevant factor affecting cost.

2. The most important use of the cost-volume-profit graph is to show the

A. break-even point.
B. cost/margin ratio at various levels of sale activity.
C. relationship among volume, costs, revenues over wide ranges of activity.
D. determination of cross over point.

3. Positive net income is shown on a cost-volume-profit chart when the total

A. variable expense line exceeds the total fixed expense line.
B. expense line exceeds the total sales revenue line.
C. sales revenue line exceeds the total fixed expense line.
D. sales revenue line exceeds the total expense line.

4. If a company decreases the variable expense per unit while increasing the tub fixed
expenses, the total expense line relative to its previous position will shift
A. downward and have a steeper slope.
B. downward and have a flatter slope.
C. upward and have a flatter slope.
D. upward and have a steeper slope.

5. Which of the following formulas is used to determine the break-even point when using
the contribution margin method?
A. Revenues less operating income equals variable costs plus fixed costs.
B. Unit contribution margin times the break-even number of units equals fixed
costs.
C. Selling price less unit fixed costs equal contribution margin.
D. Total fixed costs equals total revenues.

6. Which of the following statements about determining the breakeven point FALSE?
A. Operating income is equal to zero.
B. Contribution margin - fixed costs is equal to zero.
C. Revenues equal fixed costs plus variable costs.
D. Breakeven revenues equal fixed costs divided by the variable cost per unit.

7. Which of the following will result in raising the breakeven point?

A. A decrease in the variable cost per unit.
B. An increase in the semi-variable cost per unit
C. An increase in the contribution margin per unit.
D. A decrease in income tax rates.

8. A fixed cost is the same percentage of sales in three different months. Which of the
following is true?
A. The company had the same sales in each of those months.
B. The cost is both fixed and variable.
C. The company is operating at its break-even point.
D. The company is achieving its target level of profit.

9. Which of the following would decrease unit contribution margin the most?
A. A 15% decrease in selling price.
B. A 15% increase in variable expenses.
C. A 15% decrease in variable expenses.
D. A 15% decrease in fixed expenses.

10. A multi-product company

A. cannot use CVP analysis.
B. must use a separate CVP graph for each of its products.
C. can use CVP analysis only if the contribution margin percentages on each product
are the same.
D. could earn a higher-than-expected profit even though the total number of units
sold was less than expected.

11. All of the following statements related to the use of break-even analysis are true
except:
A. a change in fixed costs changes the break-even point but not the contribution margin
figure
B. a combined change in fixed and variable costs in the same direction causes a sharp
change in the break-even point
C. a change in fixed costs changes the contribution margin figure but not the
break-even point
D. a change in per-unit variable costs changes the contribution margin ratio
E. a change in sales price changes the break-even point
12. If a firm's net income does not change as its volume changes, the firm('s)
A. must be in the service industry.
B. must have no fixed costs.
C. sales price must equal PO.
D. sales price must equal its variable costs.

13. Which of the following statement(s) is (are) incorrect?

I. The margin of safety ratio is equal to the margin of safety in total peso amount divided
by the actual or (expected) sales.
II. For CVP analysis, both variable and fixed costs are assumed to have a linear
relationship within the relevant range of activity.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

14. Which of the following is (are) included as an inherent assumption(s) of C Analysis?

I. The time value of money is ignored.
II. Selling prices per unit and market conditions remain unchanged.
III. Cost and revenue relationships are predictable and non-linear over relevant range of
activity and a specified period of time.

A. I and II
B. II and III
C. I and III
D. I, II and III
E. Answer not given

15. Which of the following will cause the breakeven point to increase?
I. Decrease in variable cost per unit
II. Decrease in margin of safety
III. Increase in income tax rates.

A. I and II
B. II and III
C. I and III
D. I, II and III
E. Answer not given
16. I. Dividing total fixed costs by the contribution margin ratio yields break-even point in
units.
II. After the break-even point is reached, generally, each peso amount of contribution
margin is a peso amount of after-tax profit.
III. On a CVP graph, the total revenue line intersects the y-axis at zero.

A. True, true, false

B. False, false, true
C. True, false, false
D. False, false, false
E. Answer not given

17. In relation to Cost-Volume-Profit (CVP) Analysis, which of the below statement(s) is

(are) incorrect?

I. When using CVP analysis to determine sales level for a desired amount of profit, the
profit is treated as an additional cost to be covered.
II. There is an inverse relationship between degree of operating leverage and the
margin of safety.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

18. Which of the following is incorrect?

I. In two companies making the same product and with the same total sales and total
expenses, the contribution margin ratio will be lower in the company with a higher
proportion of fixed expenses in its cost structure.
II. A company with high operating leverage will experience a lower reduction in net
operating income in a period of declining sales than will a company with low operating
leverage.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

19. If the government were to increase corporate tax rates, after-tax cost-volume- profit
relationships for individual firms would change as follows:
A. Breakeven points would increase.
B. Breakeven points would decrease.
C. There would be no change in the breakeven points.
D. There would be no change whatsoever in cost-volume-profit relationships.

20. Which of the following best describes the impact of an increase in fixed cost?
A. The increase in fixed cost will cause an increase in variable cost.
B. The increase in fixed cost will result in an increase in selling more units.
C. The increase in fixed cost causes net income to decrease and the break-even point
to decrease.
D. The increase in fixed cost causes net income to decrease and the break-even
point to increase.

21. Assuming a company has net income, which of the following statements is true
regarding the contribution margin per unit?
A. It will decrease as the number of units sold increases.
B. It will decrease as the number of units sold decreases.
C. It indicates the amount that net income will increase with the sale of each
additional unit.
D. It indicates the amount that variable costs will decrease with the sale of each
additional unit.

22. The break-even point would be increased by:

A. a decrease in total fixed expenses.
B. a decrease in the ratio of variable expenses to sales.
C. an increase in the contribution margin ratio.
D. none of these.

23. In CVP analysis, linear functions are assumed for

A. contribution margin per unit.
B. fixed cost per unit.
C. total costs per unit.
D. all of the above.

24. If the degree of operating leverage is 4, then a one percent change in quantity sold
should result in a four percent change in:
A. unit contribution margin.
B. revenue.
C. variable expense.
D. net operating income.

25. On a break-even chart, the break-even point is located at the point where the total
A. revenue line crosses the total fixed cost line.
B. revenue line crosses the total contribution margin line.
C. fixed cost line intersects the total variable cost line.
D. revenue line crosses the total cost line.

26. The margin of safety would be negative if a company('s)

A. was presently operating at a volume that is below the break-even point
B. present fixed costs were less than its contribution margin.
C. variable costs exceeded its fixed costs.
D. degree of operating leverage is greater than 100.

27. Which of the following decreases break-even point?

A. Increase in direct labor cost per unit.
B. Increase in margin of safety ratio.
C. Decrease in selling price per unit
D. Increase in the tax rate due to amendments in the tax laws.

28. In a CVP graph, the slope of the total revenue line indicates the
A. rate at which profit changes as volume changes.
B. rate at which the contribution margin changes as volume changes.
C. ratio of increase of total fixed costs.
D. total costs per unit.

29. CVP analysis is helpful in the following areas, except:

A. Price setting activities
B. Ascertainment of optimum product mix
C. Determination of "no profit" and "no loss" level
D. Calculation of the required rate of return and weighted average cost of capital
of long-term investment proposals.

30. KGA CORP. manufacturers and sells a single product that has a positive
contribution margin. If the selling price and variable expenses both decrease by 5% and
fixed expenses do not change, then what would be the effect on the contribution margin
per unit and the contribution margin ratio?

A. B. C. D.
CM per unit Decrease Decrease No change No change
CM ratio Decrease No change Decrease No change

PART 2: Self-test Questions (Quizzers)

3-5 Multiple Choice (Theories)

1. In a cost-volume-profit graph, the slope of the total cost curve represents

A. the selling price per unit
B. the contribution margin per unit
C. the variable cost per unit
D. total contribution margin
E. total fixed costs.

2. In a cost-volume-profit graph

A. the total revenue line crosses the horizontal axis at the breakeven point.
B. beyond the breakeven sales volume, profits are maximized at the sales volume
where total revenues equal total costs.
C. an increase in unit variable costs would decrease the slope of the total cost line.
D. an increase in the unit selling price would shift the breakeven point in units to
the left.
E. an increase in the unit selling price would shift the breakeven point in units to the
right.

3. The most likely strategy to reduce the breakeven point would be to

A. increase both the fixed costs and the contribution margin.
B. decrease both the fixed cost and the contribution margin.
C. decrease the fixed costs and increase the contribution margin.
D. increase the fixed costs and decrease the contribution margin.

4. The contribution income statement

A. reports gross margin.
B. is allowed for external reporting to shareholders.
C. categorizes costs as either direct or indirect.
D. can be used to predict future profits at different levels of activity.

5. Which formula gives the sales dollars required to earn a target profit? (P = selling
price, V = variable cost per unit, F = total fixed costs, T = target profit)

A. F / [(P - V) / P]
B. (F + T) / P
C. (F + T) / [(P - V) / P]
D. F + T / V
6. Which of the following would result in a change in the break-even point?

A. Sales increased.
B. Total production decreased.
C. Fixed costs increase due to addition to physical plant.
D. Total variable costs increased as a function of higher production.

7. The breakeven point in units increases when unit costs

A. increase and sales price remains unchanged.
B. decrease and sales price remains unchanged.
C. remain unchanged and sales price increases.
D. decrease and sales price increases.

8. Cost-volume-profit analysis is a key factor in many decisions, and product lines,

pricing of products, marketing strategy, and productive facilities. A calculation used in
CVP analysis is the break-even point. Once the break-even point has been reached
operating income will the utilization of increase by
A. sales price per unit for each additional unit sold.
B. contribution margin per unit for each additional unit sold.
C. fixed cost per unit for each additional unit sold.
D. gross margin per unit for each additional unit sold.

9. In a multiple-product firm, the product that has the highest contribution margin per
unit will
A. generate more profit for each P1 of sales than the other products.
B. have the highest contribution margin ratio.
C. generate the most profit for each unit sold.
D. have the lowest variable costs per unit.

10. When an organization is operating above the breakeven point, the degree or
amount that sales may decline before losses are incurred is called the
A. residual income rate.
B. marginal rate of return.
C. margin of safety.
D. target (hurdle) rate of return.

11. As projected net income increases the

A. degree of operating leverage declines.
B. margin of safety stays constant.
C. break-even point goes down.
D. contribution margin ratio goes up.
12. Masaya Company sells three products: A, B and C. Product A's unit contribution
margin is higher than Product B's which is higher than Products C's. Which one of the
following events is most likely to increase the company's overall break-even point?

A. A decrease in Product C's selling price.

B. An increase in the overall market demand for Product B.
C. The installation of new automated equipment and subsequent lay-off of factory
workers.
D. A change in the relative market demand for the products, with the increase favoring
Product A relative to Product B and Product C.

13. If the sales mix shifts toward higher contribution margin products, the break- even
point
A. decreases.
B. increases.
C. remains constant.
D. It is impossible to tell without more information.

14. Which of the following statements is correct regarding CVP Analysis?

A. If a business sells two or more products, it is not possible to estimate the break-even
point.
B. Margin of safety can also be computed as degree of operating leverage divided by 1.
C. The reliability of cost-volume-profit analysis does NOT depend on the assumption
that costs can be accurately divided into fixed and variable components.
D. Contribution margin ratio is regarded as constant despite the change in
activity level provided the cost and price structure of an entity is the same.

15. Which of the following statements is incorrect regarding degree of operating

leverage?
A. The degree of operating leverage shows the extent to which a company uses fixed
costs in its cost structure.
B. Degree of operating leverage is constant if the only change pertains to volume or
quantity sold.
C. Degree of operating leverage (DOL) is a financial ratio that measures the sensitivity
of a company's operating income in response to changes in sales.
D. None from the choices

16. Cost-volume-profit analysis cannot be used if which of the following occurs?

A. Costs cannot be properly classified into fixed and variable costs
B. The total fixed costs change
C. The per unit variable costs change
D. Per unit sales prices change

17. The point where the total costs line intersects the left-hand vertical axis on the cost-
volume-profit chart represents:
A. the minimum possible operating loss
B. the maximum possible operating income
C. the total fixed costs
D. the break-even point

18. Which of the following is not an assumption underlying cost-volume-profit analysis?

A. The break-even point will be passed during the period.
B. Total sales and total costs can be represented by straight lines.
C. Costs can be accurately divided into fixed and variable components.
D. The sales mix is constant.

19. With the aid of computer software, managers can vary assumptions regarding
selling prices, costs, and volume and can immediately see the effects of each change
on the break-even point and profit. Such an analysis is called:
A. "What if" or sensitivity analysis
B. vary the data analysis
C. computer aided analysis
D. data gathering

20. Which of the following is not an underlying assumption of CVP analysis?

A. Changes in activity are the only factors that affect costs.
B. Cost classifications are reasonably accurate.
C. Beginning inventory is larger than ending inventory.
D. Sales mix is constant.

21. Which is the true statement?

A. In a CVP income statement, costs and expenses are classified only by function.
B. The CVP income statement is prepared for both internal and external use.
C. The CVP income statement shows contribution margin instead of gross profit.
D. In a traditional income statement, costs and expenses are classified as either
variable or fixed.

22. Which of the following would not be an acceptable way to express contribution
margin?
A. Sales minus variable costs
B. Sales minus unit costs
C. Unit selling price minus unit variable costs
D. Contribution margin per unit divided by unit selling price

23. The margin of safety ratio

A. is computed as actual sales divided by break-even sales.
B. indicates what percent decline in sales could be sustained before the company
would operate at a loss.
C. measures the ratio of fixed costs to variable costs.
D. is used to determine the break-even point.

24. Reducing reliance on human workers and instead investing heavily in computers
and online technology will
A. reduce fixed costs and increase variable costs.
B. reduce variable costs and increase fixed costs.
C. have no effect on the relative proportion of fixed and variable costs.
D. make the company less susceptible to economic swings.

25. Which of the following statements is not true?

A. Operating leverage refers to the extent to which a company's net incomereacts to a
given change in sales.
B. Companies that have higher fixed costs relative to variable costs have higher
operating leverage.
C. When a company's sales revenue is increasing, high operating leverage is good
because it means that profits will increase rapidly.
D. When a company's sales revenue is decreasing, high operating leverage is
good because it means that profits will decrease at a slower pace than revenues
decrease.

3-6 Multiple Choice (Problems)

1. At a sales volume level of 2,250 units, GREECE COMPANY's contribution margin is

one and one-half of the fixed costs of P36,000. Contribution margin is 30% How many
units must be sold by the company to breakeven?
A. 1,250
B. 1,500
D. 2,520
C. 2,580

2. FINLAND CORP. is planning to sell 400,000 hammers for P1.50 per unit. The
contribution margin ratio is 20%. If FINLAND will break even at this level of sales, what
are the fixed costs?
A. P120,000
B. P280,000
C. P400,000
D. P480,000

Use the following information in answering the next item(s): Below is an income
statement for ICELAND CORP.:

Sales P600,000
Variable costs (150,000)
Contribution margin 450,000
Fixed costs (300,000)
Profit before taxes 150,000

3. What is ICELAND's degree of operating leverage?

A. 1.33
B. 2.00
C. 3.00
D. 4.00

4. Based on the cost and revenue structure on the income statement, what was
ICELAND's break-even point in dollars?
A. P300,000
B. P400,000
C. P425,000
D. P450,000

5. What was ICELAND's margin of safety?

A. P150,000
B. P175,000
C. P200,000
D. P300,000

6. Assuming that the fixed costs are expected to remain at P300,000 for the coming
year and the sales price per unit and variable costs per unit are also expected to remain
constant, how much profit before taxes will be produced if the company anticipates
sales for the coming year rising to 125 percent of the current year's level?

A. P112,500
B. P187,500
C. P262,500
D. P300,000

7. PORTUGAL CORP. earns an after-tax profit of P2,400 on sales of P88,000. The

average tax rate of the company is 25%. The only product in this operation sells for
P20, of which P15 is in variable cost. You were asked to analyze the break- even point
of this project and its sensitivities to change in cost levels and of product price. A
decrease in variable costs of P1.00 per unit and an increase in fixed costs of P6,000
would bring the break-even point to
A. no change at all.
B. a lower level.
C. P82,660
D. P45,000

8. ENGLAND CORP. incurs annual fixed costs of P250.000 in producing and selling
single product. Estimated unit sales are 125.000. An after-tax income of P75,000 is
desired by management. The company projects its income tax rate at 40 percent. What
is the maximum amount that ENGLAND can expend for variable costs per unit and still
meet its profit objective if the sales price per unit is estimated at P6?

A. P3.37
B. P3.59
C. P3.00
D. P3.70

9. SERBIA CORP. manufactures a single product. In the prior year, the company had
sales of P90,000, variable costs of P50,000, and fixed costs of P30,000. SERBIA
expect PSC structure and sales price per unit to remain the same in the current year
however, total sales are expected to increase by 20 percent. If the current year
projections are realized, net income should exceed the prior year's net income by:

A. 100 percent.
B. 80 percent.
C. 20 percent.
D. 50 percent.

10. ARMENIA INC. operates on a contribution margin of 30% and currently has fixed
costs of P200,000. Next year, sales are projected to be P1,000,000. An advertising
campaign is being evaluated that costs an additional P30,000. How much would sales
have to increase to justify the additional expenditure?
A. P60,000
B. P90,000
C. P100,000
D. P300,000

11. GREENLAND INC. wishes to market a new product for P12.00 per unit. Fixed costs
to manufacture this product are P800,000 for less than 500,000 units and P1,200,000
for 500,000 or more units. Contribution margin is 20%. What would be the amount of the
sales pesos to realize a net income from this product of P500,000?
A. P5,200,000
B. P6,000,000
C. P8,000,000
D. P8,500,000

12. SPAIN CORP. has fixed costs of P90,300. At a sales volume of P360,000, return on
sales is 10%; at a P600,000 volume, return on sales is 20%. What is the break- even
volume?
A. P225,000
B. P240,000
C. P258,000
D. P301,000

13. The following information relates to AMSTERDAM COMPANY:

Sales at the break-even point P312,500

Total fixed expenses 250,000
Net operating income 150,000

What is AMSTERDAM's margin of safety?

A. P62,500
B. P100,000
C. P187,500
D. P212,500

14. POLAND CORP. has a break-even point of 120,000 units. If the firm's sole product
sells for P40 and fixed costs total P480,000, the variable cost per unit must be:
A. P4.
B. P36.
C. P44.
D. an amount that cannot be derived based on the information presented.
E. an amount other than those in choices "A," "B," and "C" but one that can be derived
based on the information presented.
15. GREECE CORP. is a wholesaler that sells a single product. Management has
provided the following cost data for two levels of monthly sales volume. The company
sells the product for P127.20 per unit.

Sales volume (units) 5,000 6,000

Cost of sales P419,000 P502,800
Selling and administrative costs P186,500 P202,200

The best estimate of the total contribution margin when 5,300 units are sold is:
A. P230,020
B. P51,410
C. P146,810
D. P32,330

16. Data concerning ITALY CORP.'s single product appear below:

Selling price per unit P200.00

Variable expense per unit P58.00
Fixed expense per month P407,540

The break-even in annual dollar sales is closest to:

A. P4,107,600
B. P6,888,000
C. P574,000
D. P795,600

17. BELGIUM CORP. produces and sells a single product. Data concerning that product
appear below:
Per Unit Percent of Sales
Selling price P130 100%
Variable expenses 78 60%
Contribution margin P 52 40%

The company is currently selling 6,000 units per month. Fixed expenses are P263,000
per month. The marketing manager believes that a P5,000 increase in the monthly
advertising budget would result in a 140 unit increase in monthly sales. What should be
the overall effect on the company's monthly net operating income of this change?

A. increase of P2,280
B. increase of P7,280
C. decrease of P5,000
D. decrease of P2,280
Use the following information in answering the next item(s): VATICAN CORP. produces
and sells a single product. Data concerning that product appear below:

Per Unit Percent of Sales

Selling price P140 100%
Variable expenses 42 30%
Contribution margin P 98 70%

Fixed expenses are P490,000 per month. The company is currently selling 6,000 units
per month. Consider each of the following questions independently.

18. The marketing manager believes that a P14,000 increase in the monthly advertising
budget would result in a 150 unit increase in monthly sales. Wi advertising budget effect
on the company's monthly net operating income from this change?
A. increase of P700
B. increase of P14,700
C. decrease of P14,000
D. decrease of P700

19. (Refer to the original data when answering this question.) Management is
considering using a new component that would increase the unit variable cost by PS.
Since the new component would increase the features of the company's product, the
marketing manager predicts that monthly sales would increase by 300 units. What
should be the overall effect on the company's monthly net operating income from this
change?
A. decrease of P2,100
B. decrease of P27,900
C. increase of P2,100
D. increase of P27,900

20. (Refer to the original data when answering this question.) The marketing manager
would like to introduce sales commissions as an incentive for the sales staff. The
marketing manager has proposed a commission of P11 per unit. In exchange, the sales
staff would accept a decrease in their salaries of P58,000 per month. (This is the
company's savings for the entire sales staff.) The marketing manager predicts that
introducing this sales incentive would increase monthly sales by 100 units. What should
be the overall effect on the company's monthly net operating income from this change?
A. increase of P700
B. increase of P56,900
C. decrease of P115,300
D. increase of P588,700
21. ROMANIA CORP. produces and sells two products. In the most recent month,
Product R10L had sales of P28,000 and variable expenses of P6,440. Product X96N
had sales of P22,000 and variable expenses of P7,560. And the fixed expenses of the
entire company were P32,710. The break-even point for the entire company is closest
to:
A. P32,710
B. P45,431
C. P46,710
D. P17,290

Use the following information in answering the next item(s): HUNGARY CORP. is
engaged in producing and selling 2 types of furniture, DELUXE and SUPREME. The
two products are sold in a ratio of 2 units of DELUXE to 3 units of SUPREME. Data
concerning these products are as follows:

DELUXE SUPREME
Selling Price P12 P28
Unit Variable Cost 3 16

HUNGARY CORP. has a total fixed cost of P600,000 per year and faces a tax rate of
30%.

22. Compute the volume of sales in units of DELUXE if the company plans to earn 10
percent on sales revenue in before-tax income.
A. 27,778 units
B. 41,667 units
C. 50,000 units
D. 32,143 units

23. Compute the necessary peso sales of SUPREME to breakeven.

A. P933,333
B. P266,667
C. P480,000
D. P720,000

24. UKRAINE CORP. is selling three products, Product Red, Product White, and
Product Blue. The Company sells three units of Red for every unit of Blue, and two units
of White for every unit of Red. Fixed costs are P720,000. Contribution margins are:
P1.70 per unit of Red; P2.00 per unit of White; and P2.90 per unit of Blue. How many
units of White would the Company sell at breakeven point?
A. 360,000
B. 108,000
C. 72,000
D. 216,000
25. VATICAN CORP. produces and sells three products with the following data:

Product L Product E1 Product E2

Sales P30,000 P60,000 P10,000
Variable costs 24,000 40,000 5,000

Assuming that the total fixed costs are P18,600 and the sales mix is proportional to
peso sales, how much should be the sale of product L to breakeven?
A. P6,000
B. P18,000
C. P36,000
D. P60,000

26. ROMANIA CORP. shows the following planned data for the year 2019:
ESTIMATED SALES 20,000 units
ESTIMATED COSTS:
Direct materials P50,000
Direct labor 40,000
Variable factory overhead 20,000
Fixed factory overhead 10,000
Fixed administrative expense 30,000

Selling expenses (all variable) are accounted for as 20% of sales. The company's
planned profit is P0.75 per unit. In order to attain the company's goal for 2019, the
selling price per unit must be set at:
A. P 8.25
B. P11.50
C. P 7.50
D. P10.32

27. GERMANY INC. has a degree of operating leverage of 4. Its sales for the upcoming
year is P500,000. The increase in sales did not result to a change in the price and cost
structure of the entity. What are GERMANY's breakeven sales?
A. P375,000
B. P125,000
C. P2,000,000
D. P300,000

28. FINLAND WATCHES CORP. sells the best and top-of-the-line watches in town, The
following information relates to its operating results this year:
Number of watches sold 35,000
Margin of safety in terms of watches 21,000
Sales P1,750,000
Net loss 210,000

What is FINLAND's contribution margin ratio?

A. 66.67%
B. 20.00%
C. 60.00%
D. 12.00%

29. The company expected to sell 45,000 units next year with the following results:
Sales P900,000
Variable costs 540,000
Contribution margin 360,000
Fixed costs 150,000
Income before taxes 210,000
Income taxes 84,000
Net income P126,000

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. 19.96
B. 20.44
C. 20.22
D. 22.22

30. A company sells two products, X and Y. The sales mix consists of a composite unit
of two units of X for every five units of Y (2:5). Fixed costs are P49,500. The unit
contribution margins for X and Y are P2.50 and P1.20, respectively. Considering the
company as a whole, the number of composite units to break even is
A. 1,650
B. 4,500
C. 8,250
D. 22,500