DON HONORIO VENTURA STATE UNIVERSITY
Villa de Bacolor, Pampanga
MEXICO CAMPUS
San Juan, Mexico, Pampanga
mexicocampus@dhvsu.edu.ph
Name:
Date:
Course, Year & Section:
ACTIVITY 2: STRATEGIC BUSINESS ANALYSIS
PROBLEMS
Below is an income statement for Company:
Sales
P400,000
Variable costs
(125,000)
Contribution margin
P275,000
Fixed costs
(200,000)
Profit before taxes
P 75,000
Question 1: Based on the cost and revenue structure on the income statement, what was the break-even
point in pesos?
a. P200,000
c. P300,000
b. P325,000
d. P290,909
Question 2: What was the margin of safety?
a. P200,000
c. P100,000
b. P75,000
d. P109,091
Kay Corporation produces and sells a single product. Information on its costs follow:
Variable costs:
SG&A
P2 per unit
Production
P4 per unit
Fixed costs:
SG&A
P12,000 per year
Production
P15,000 per year
Question 1:
Assume it produced and sold 5,000 units. At this level of activity, it produced a profit of P18,000. What
was the sales price per unit?
a. P15.00
c. P9.60
b. P11.40
d. P10.00
Question 2:
In the upcoming year, it estimates that it will produce and sell 4,000 units. The variable costs per unit
and the total fixed costs are expected to be the same as in the current year. However, it anticipates a
sales price of P16 per unit. What is the projected margin of safety for the coming year?
a. P7,000
c. P18,400
b. P20,800
d. P13,000