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Major 4

The document provides an income statement for Nancy Corporation for the year ended December 31, 2021 including sales, cost of goods sold, gross income, expenses and operating income. It also includes additional data on fixed and variable costs to calculate metrics like break-even point, margin of safety, contribution margin and their respective ratios.

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Kathlyn Jambalos
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144 views3 pages

Major 4

The document provides an income statement for Nancy Corporation for the year ended December 31, 2021 including sales, cost of goods sold, gross income, expenses and operating income. It also includes additional data on fixed and variable costs to calculate metrics like break-even point, margin of safety, contribution margin and their respective ratios.

Uploaded by

Kathlyn Jambalos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Kathlyn Jambalos

Desiree Villanueva
Frenzie Mae Magyaya
Fritz Medallon

Nancy Corporation
Income Statement
For the Year Ended December 31, 2021

Sales (20,000 units) P 300,000

Less: Cost of Goods Sold 180,000

Gross income 120,000

Less Selling and administrative expenses 80,000

Operating income P 40,000

Other data:
1/3 of the cost of goods sold is fixed
75% of the selling and administrative expenses is variable.

A. Total fixed cost

Cost of good sold 180,000


(⅓)Cost of goods sold is fixed
60,000

Selling and administrative expenses 80,000


(75%)Selling and administrative expenses is variable
(25% x 80,000) 20,000
Total fixed cost 80,000
B. Variable cost per unit and variable cost ratio

Cost of goods sold 180,000


Number of units 20,000
Variable cost per unit 9

Sales 300,000
Number of unit 20,000
Selling price per unit 15

Variable cost per unit 9


Selling price per unit 15
Variable cost ratio 0.6 or 60%

C. Contribution margin per unit and contribution margin ratio

Selling price per unit 15


Variable cost per unit 9
Contribution margin per unit 6

Contribution margin per unit 6


Selling price per unit 15
Contribution margin ratio 0.4 or 40%

D. Break-even point in units and in pesos

Total fixed cost 80,000


Contribution margin per unit 6
Break-even point in unit 13,333.33

Total fixed cost 80,000


Contribution margin ratio 40%
Break-even point in pesos 200,000

E. Margin of safety in units and in pesos

Sales unit 20,000


Break-even point in unit 13,333.33
Margin of safety in units 6,666.67

Sales 300,000
Break-even point in pesos 200,000
Margin of safety in pesos 100,000
F. Margin of safety ratio and break-even sales ratio

Margin of safety in pesos 100,000


Sales 300,000
Margin of safety ratio 33.33%

Break-even point in pesos 200,000


Sales 300,000
Break-even sales ratio 66.67%

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