COURAGE Corporation has the following data for the year 20XX:

Sales, 9,000 units

Unit selling price, Php250

Variable cost per unit, Php120

Total annual fixed expenses, Php800,000

Requirement:

1. Prepare a contribution margin income statement by filling in the format shown below:

TOTAL PER UNIT PERCENT

Sales 2250000 250 100

Total variable expense 1080000 120 48

Total Contribution Margin 1170000 130 52

Total fixed expenses 800,000

Operating Income 370000

2. Fill in the blanks: CM Total 1170000, CM per unit 130, and CM ratio 52%.

3. Breakeven point (BEP) is that point when the company realized no profit or incurred

no loss.

Using the formula approach, how much is the (a) breakeven point in pesos and (b) in

units. Show the formula you used to arrive at your answer.

 a) b)

250*6153.85=1538461.54 800000/(250-120)=6153.85

4. CVP analysis is also a device in product pricing decisions. Referring to the sample

company in Activity 1, if the target profit is expected at Php370,000 and marketing

budgeted sales is 12,000 units, what is the selling price that COURAGE Company must

charge to achieve the projections? Php187.5

5. Revisiting our activity problem, compute for the:

Margin of safety and margin of safety ratio

Margin of safety

9000-6153.85=2846.15 or 2846

Margin of safety ratio

2250000-1538461.54=711538

711538/2250000=31.62%