Prove that CMRxMSR=NPR Barack Co. BEP in sales are P528,000. The variable cost to sales is 60%, while the profit ratio is 8%Determine the following:Fixed cost 2. Actual Sales 3. Profit 4. Margin of Safety 5. Margin of Safety Ratio Mahjong Co. produces and sells two products, tables and chairs. Following is next month’s income budgetSales in units ChairsTablesTotal 600150750 Sales P 1,200.00 P 187.50P 1,387.50VC 1,050.00 112.50 1,162.50CM 150.00 75.00 225.00FX 90.00NI 135.00Required:How many units of tables should be sold next month to break even?How many units of chairs should be sold to earn a profit of P150How many units of chairs should be sold to earn a profit of P100 net of 30% tax? Actual operating results for the shop are presented below:S 250,000.00VC 100,000.00CM 150,000.00FX 120,000.00NI 30,000.00Required:Compute the Degree of Operating Leverage FactorUsing the said concept, how many percent would income increase if the sales increase by 10%?

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Answered: Prove that CMRxMSR=NPR

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Prove that CMRxMSR=NPR

Barack Co. BEP in sales are P528,000. The variable cost to sales is 60%, while the profit ratio is 8%

Determine the following:

Fixed cost 2. Actual Sales 3. Profit 4. Margin of Safety 5. Margin of Safety Ratio

Mahjong Co. produces and sells two products, tables and chairs. Following is next month’s income budget

Sales in units	Chairs	Tables	Total
	600	150	750

Sales	P 1,200.00	P 187.50	P 1,387.50
VC	1,050.00	112.50	1,162.50
CM	150.00	75.00	225.00
FX			90.00
NI			135.00

Required:

How many units of tables should be sold next month to break even?
How many units of chairs should be sold to earn a profit of P150
How many units of chairs should be sold to earn a profit of P100 net of 30% tax?

Actual operating results for the shop are presented below:

S	250,000.00
VC	100,000.00
CM	150,000.00
FX	120,000.00
NI	30,000.00

Required:

Compute the Degree of Operating Leverage Factor
Using the said concept, how many percent would income increase if the sales increase by 10%?

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