Question

Clayroll Products produces a unique item with the following information:

Sales price P100 per unit

Variable costs P 40 per unit

Fixed Costs (total) P60,000

Units sold 5,000

Required: Calculate the following based on the above information:

Net income

Contribution margin per unit

Contribution margin ratio

If Clayroll sells 500 more additional units, by what amount will net income increase?

If Clayroll has an additional P20,000 in sales, by what amount will net income increase?

Answer 1

Please find the attached image,

Please comment for additional explanation.

Thanks,

Net Income Sales (P1OO X S.COO) 5oop? O veniable cost (P40 x 500) 200,00 contribution 300 000 O fixed cost Nel Jncome 249001 2) Contobuchicon mangin Deo colt Sales Price per unit - variable Cest per unit Ploo -P40 60.000 P6o 37 CM ROHO Contobutionsales x 100 67780 Kim 60% 47 The net Profit Shall be increased by the amount of contribution earned PGO x 500 =P 30.000 Since the fixed cost hes already been covered in earlier Sales: By 악 Net Income Sales Sooooo + 20700) S25000 contabutton margin 60% 312000 Finced cost 60.000 Nee Sncome I contribution - Risced cost ] 252,000 Hence Net Income would be increased by P12.000 C 282002 -2 480P From the origines Net Jacomp.