Solved Problems For Break Even Analysis 1

1. Geotechnics Philippines makes and sells certain sieving instruments.
The selling
price is P200 per unit. Fixed expenses total P10,000,000.00 per year. What is the
production price if the break even point is 300,000 units?
Solution:
Let x = production price
300,000 x 200 = 10,000,000 + X (300,000)
X = P166.67
2. A factory engaged in all fabrication of an automobile part with a production
capacity of 500,000.00 units per year is only operating at 48% of capacity due to
unavailability of the necessary foreign currency to finance the importation of their
raw materials. The annual income is P400,000.00, Annual fixed cost is
P200,000.00 and variable cost are P0.225 per unit.
Solution:
Total units produced per year = 0.48(500,000) = 240,000 units
Total annual cost
= 200,000 + 0.225(240,000) = P254,000
Total annual income = P400,000
Total profit = P400,000 – 254,000 = P146,000.00
200,000
Selling price per unit = 240,000 = P0.833
0.833X = 200,000 + 0.225X

X = 328,948 UNITS
3. The following data for 2015 are available for Capitol Steel Corporation which
manufactures and sells a single reinforcement product line.
Unit selling price -------------------------------------P1,500.00
Unit variable cost-------------------------------------P1000.00
Unit contribution margin---------------------------P20.00
Total fixed cost----------------------------------------P5,000,000.00
Solution:
Total expenses = 5,000,000 + 1,000X
Total income 1500X
To break even:
5000000 + 1000x = 1500X
X = 10,000 units
4. A manufacturer produces certain items at a labor cost per unit of P520, material
cost per unit of P125.00, variable cost of P8.00 each. If the item has a selling
price of P1000.00, how many units must be manufactured each month for the
manufacturer to break even if monthly overhead is P750,000
Solution:
(520 + 125 + 8) X + 750,000 = 1000X
X = 2162 units
5. General electric company which manufacture electric motor has a capacity of
producing 150 motors a month. The variable cost is P8,000.00 per month, the
average selling price of the motor is P1500.00 per motor. Fixed costs of the
company amount to P200,000.00 per month which includes all taxes. Determine
the numbers of motors to be produced per month to break even.
Solution:
Expenses per month
48000 + 200,000 = P248,000
248,000 = 150X
X = 1654 units
6. The Siemens Phils. manufactures PLCs that it sells for P5000.00 each. It costs
P15,000,000.00 per year to operate its plant. This sum includes rent,
depreciation charges on equipment and salary payment. If the cost to produce
one bookcase is P3,500.00, how many cases must be sold each year for the
ABC to avoid taking a loss?
Solution:
5,000X = 3,500X + 15,000,000
X = 10,000 cases sold each year
7. A manufacturer produces certain items at a labor cost of P250.00 each, material
cost of P150.00 each and variable cost of P5 each. If the item has a unit price of
P410.00, how many numbers of units must be manufactured each month for the
manufacturer to break even if the monthly overhead is P550,000.00.
Solution:
(250 + 150 +5) X + 550,000 = 410X
X = 110,000 units
8. Steel bolts manufacturer incurs a yearly fixed operating cost of P18,000,000.00.
Each bolts manufactured cost P350.00 to produce and sells P720.00. What is the
manufacturer break even sales volume in drums per year?
Solution:
18,000,000 + 350 X = 720X
X = 48,649 units
9. A steel manufacturer produces tension bolts at a labor cost of P100.00 each and
a material cost of P230.00 each. The fixed charges on the business are
P2,000,000.00 a month and a variable cost are P50.00 each. If they sell at
P500.00 each, how many pices must be produced each month for the
manufacturer to break even.
SOLUTION:
Let x = no. of tension bolts
Monthly income = P500x
Monthly cost = 2,000,000 + 100X + 230X + 50X
Income = Cost
X=16, 667 units
10. A new wood manufacturer produces a certain construction material at a labor
cost of P20.00 per piece, material cost of P80 per piece and variable cost of
P3.00 per piece. The fixed charge on the business is P200,000.00 a month. If he
sells the finished product at P120.00 each, how many pieces must be
manufactured in each month to break even?
Solution:
(20+ 80 + 3) X + 200,000 = 120X
X = 11,765 pieces

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1. Geotechnics Philippines makes and sells certain sieving instruments.

0.833X = 200,000 + 0.225X

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