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LaSalle Lipa and others who love the idea of eating vegan burgers almost any time of
the day.
Required:
1.) How many customers must EABW serve each month to break even? (2 pts.)
2.) How much total sales revenue must EABW earn each month to break even? (2 pts.)
3.) If the owners want to earn an operating profit of P100,000 per month, how many
customers must they serve? (2 pts)
4.) If EABW expects to serve 3,000 customers next month, what is the margin of safety
in units? In total sales pesos? As a percentage of expected sales? (4 pts.)
Answers:
Break-Even Analysis
Total Contribution Margin per
Unit
Sales Php 75,000 (c) Php 100
Less: Variable Costs 15,000 (b) 20
Contribution Margin 60,000 (a) 80
Less: Fixed Costs 60,000
Net Income 0
* Solved through Sandwich Method.
1.) EABW must serve 750 customers each month to break-even. (c)
2.) Php 75,000 must be EABW’s total sales revenue each month to break-even. (c)
3.) Operating profit is a company's profit after all expenses are taken out except for the
cost of debt, taxes, and certain one-off items.
Total Contribution Margin per
Unit
Sales Php 200,000 (b) Php 100
Less: Variable Costs 40,000 (a) 20
Contribution Margin 160,000 80
Less: Fixed Costs 60,000
Operating Profit 100,000
* Solved through Sandwich Method.
If the owners want to earn an operating profit of P100,000 per month, they must serve
2,000 customers.
4.)
Total Contribution Margin per
Unit
Sales Php 300,000 (a) Php 100
Less: Variable Costs 60,000 (b) 20
Contribution Margin 240,000 (c) 80
Less: Fixed Costs 60,000
Net Income 180,000