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Homework answers / question archive / In 2017, Craylon Company has sales of P1,000,000, variable costs of P250,000, and fixed costs of P255,000
In 2017, Craylon Company has sales of P1,000,000, variable costs of P250,000, and fixed costs of P255,000. In 2018, the company expects annual property taxes to decrease by P15,000
Calculate the breakeven point (in peso) for 2018.
New Fixed Cost = Old Fixed Cost - Property Tax
=P255,000 - P15,000
=P240,000
Contribition Margin Ratio = (Sales - Variable Cost) / Sales × 100
=(P1,000,000 - P250,000)/P1,000,000
=P750,000/P1,000,000 × 100
=75%
Break even Point = New Fixed Cost / Contribution margin ratio
=P240,000/75%
=P320,000
