CVP Relationships

8/12/2019 CVP Relationships

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Cost-Volume-Profit Analys

MODULE 4

COST-VOLUME-PROFIT ANALYSIS

THEORIES:1. To which function of management is CVP analysis most applicale!

". Planning C. #i$ecting%. O$gani&ing #. Cont$olling %oa'illa

(. The systematic e)amination of the $elationships among sellingp$ices* +olume of sales an' p$o'uction* costs* an' p$ofits is te$me':". cont$iution ma$gin analysis C. u'geta$y analysis%. cost,+olume,p$ofit analysis #. g$oss p$ofit analysis %oa'illa

-. The te$m cont$iution ma$gin is est 'efine' as the:". 'iffe$ence etween fi)e' costs an' +a$iale costs.

%. 'iffe$ence etween $e+enue an' fi)e' costs.C. amount a+ailale to co+e$ fi)e' costs an' p$ofit.#. amount a+ailale to co+e$ +a$iale costs. %oa'illa

. Cost,+olume,p$ofit analysis allows management to 'ete$mine the$elati+e p$ofitaility of a p$o'uct y". Highlighting potential ottlenec/s in the p$o'uction p$ocess.%. #ete$mining the cont$iution ma$gin pe$ unit an' p$o0ecte'

p$ofits at +a$ious le+els of p$o'uction.C. "ssigning costs to a p$o'uct in a manne$ that ma)imi&es the

cont$iution ma$gin.#. eeping fi)e' costs to an asolute minimum. %oa'illa

2. Cost,+olume,p$ofit analysis cannot e use' if which of the followingoccu$s!". Costs cannot e p$ope$ly classifie' into fi)e' an' +a$iale costs.%. The pe$ unit +a$iale costs change.C. The total fi)e' costs change.#. Pe$ unit sales p$ices change. %oa'illa

3. The most useful info$mation 'e$i+e' f$om a $ea/e+en cha$t is the". "mount of sales $e+enue nee'e' to co+e$ ente$p$ise +a$iale

costs.

%. "mount of sales $e+enue nee'e' to co+e$ ente$p$ise fi)e' costsC. Relationship among $e+enues* +a$iale costs* an' fi)e' costs

+a$ious le+els of acti+ity.#. Volume o$ output le+el at which the ente$p$ise $ea/s e+e

%oa'il

4. 5hich of the facto$s is 6a$e7 in+ol+e' in stu'ying cost,+olume,p$o$elationships!". 8e+els of p$o'uction C. 9i)e' costs%. Va$iale costs #. "ll of these %oa'il

. "t the $ea/e+en point* fi)e' cost is always". 8ess than the cont$iution ma$ginC. ;o$e than th

cont$iution ma$gin%. E.In cost,+olume,p$ofit analysis* the g$eatest p$ofit will e ea$ne' at". One hun'$e' pe$cent at no$mal p$o'ucti+e capacity.%. The p$o'uction point with the lowest ma$ginal cost.C. The p$o'uction point at which a+e$age total $e+enue e)cee'

a+e$age ma$ginal cost.#. The point at which ma$ginal cost an' ma$ginal $e+enue a

e


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#. The nume$ of units p$o'uce' e)cee's the nume$ of units sol'.%oa'illa

1(.5hich of the following assumptions is inhe$ent to C,V,P analysis!". In manufactu$ing fi$ms* the eginning an' en'ing in+ento$y

le+els a$e the same.%. In a multi,p$o'uct o$gani&ation* the sales mi) +a$ies o+e$ time.C. The eha+io$ of total $e+enue is cu$+ilinea$.#. he $ele+ant $ange is not a consi'e$ation. %oa'illa

1-.5hich of the following assumptions is closely $ele+ant to cost,+olume,p$ofit analysis!". fo$ multiple p$o'uct analysis* the sales mi) is not impo$tant%. in+ento$y le+els $emain unchange'C. total fi)e' costs an' unit +a$iale costs can e i'entifie' an'

$emain constant o+e$ the $ele+ant $ange#. % an' C %oa'illa

1."'+ocates of cost,+olume,p$ofit analysis a$gue that:". 9i)e' costs a$e i$$ele+ant fo$ 'ecision ma/ing.%. 9i)e' costs a$e man'ato$y fo$ CVP 'ecision ma/ing.C. #iffe$entiation etween the patte$ns of +a$iale costs an' fi)e'

costs is c$itical.#. 9i)e' costs a$e necessa$y to calculate in+ento$y +aluations.

%oa'illa

12.5ith $espect to fi)e' costs* C,V,P analysis assumes total fi)e' costs". pe$ unit $emains constant as +olume changes%. $emain constant f$om one pe$io' to the ne)tC. +a$y 'i$ectly with +olume#. $emain constant ac$oss changes in +olume %oa'illa

13.The CVP mo'el assumes that o+e$ the $ele+ant $ange of acti+ity:". only $e+enues a$e linea$. C. unit +a$iale cost is not

constant. %oa'illa%. total fi)e' cost changes. #. $e+enues an' total costs a$elinea$.

14.5hich of the following is not a limiting facto$ of Cost,Volume,P$ofanalysis!". The p$ocess assumes a linea$ $elationship among the +a$iales%. The p$ocess assumes +a$iale costs pe$ unit a$e a+ailale.C. Efficiency is assume' to e constant.#. In+ento$y le+els a$e assume' to not change. %oa'il

1.Cost,+olume,p$ofit analysis is a techni


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SP selling p$ice pe$ unit9C total fi)e' costVC +a$iale cost pe$ unit". SP D 69CDVC7 C. VCD6SP 9C7%. 9CD6VCDSP7 #. 9CD6SP VC7 %oa'illa

((." company inc$ease' the selling p$ice fo$ its p$o'uct f$om P1.>> toP1.1> a unit when total fi)e' costs inc$ease' f$om P>>*>>> toP>*>>> an' +a$iale cost pe$ unit $emaine' unchange'. Howwoul' these changes affect the $ea/e+en point!". The $ea/e+en point in units woul' e inc$ease'.%. The $ea/e+en point in units woul' e 'ec$ease'.C. The $ea/e+en point in units woul' $emain unchange'.#. The effect cannot e 'ete$mine' f$om the info$mation gi+en.

%oa'illa

(-.On Fanua$y 1* (>>4* Inc$emental Company inc$ease' its 'i$ect lao$wage $ates. "ll othe$ u'gete' costs an' $e+enues we$eunchange'. How 'i' this inc$ease affect Inc$emental CompanyAsu'gete' $ea/,e+en point an' u'gete' ma$gin of safety!

%oa'illa ". %. C. #.

%u'gete' %$ea/,e+enPoint

Inc$ease

Inc$ease

#ec$ease

#ec$ease

E)pecte' ;a$gin ofSafety

Inc$ease

#ec$ease

#ec$ease

Inc$ease

(."s the +a$iale cost inc$eases ut the selling p$ice $emainsconstant* the". #eg$ee of ope$ating le+e$age 'eclines C.

%$ea/e+en point goes 'own%oa'illa

%. ;a$gin of safety stays constant #. Cont$iution ma$gin $atiogoes up

(2." +e$y high 'eg$ee of ope$ating le+e$age 6#O87 in'icates that afi$m:". has high fi)e' costs. C. has high +a$iale costs.

%oa'illa

%. has a high net income. #. is ope$ating close to i$ea/e+en point.

(3.5ith the ai' of compute$ softwa$e* manage$s can +a$y assumption$ega$'ing selling p$ices* costs* an' +olume an' can imme'iatesee the effects of each change on the $ea/,e+en point an' p$ofSuch an analysis is calle'". G5hat if o$ sensiti+ity analysis. C. Compute$ ai'e' analysis%. Va$y the 'ata analysis. #. #ata gathe$ing. %oa'il

(4.If a company $aises its ta$get peso p$ofit* its". $ea/,e+en point $ises.%. fi)e' costs inc$ease.C. $e


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->." Cost,Volume,P$ofit g$aph contains an "$ea of 8oss an' an "$eaof P$ofitaility. 5hich of the following est e)plains the 'iffe$enceetween the two points on the g$aph!". The a$ea of loss $ep$esents the 'iffe$ence etween Sales an'

Va$iale Cost.%. The a$ea of loss egins with the concept that fi)e' costs ha+e to

e $eco+e$e' p$io$ to sales cont$iuting to p$ofit.C. The a$ea of p$ofit $ep$esents the 'iffe$ence etween Sales an'

Va$iale Cost.#. The a$ea of p$ofit egins with the concept that no company

woul' ha+e any le+el of sales elow the $ea/,e+en point.%oa'illa

-1.5hich of the following est 'esc$ies the impact of selling mo$eunits!

". The inc$ease in sales +olume inc$eases total +a$iale cost.%. The inc$ease in sales +olume means an inc$ease in total fi)e'

cost.C. The inc$ease in sales inc$eases cont$iution ma$gin* causing net

income to 'ec$ease.#. The inc$ease in sales inc$eases cont$iution ma$gin pe$ unit

causing the $ea/,e+en point to 'ec$ease. %oa'illa

-(.On a cost,+olume,p$ofit cha$t 6$ea/,e+en g$aph7* whe$e a$e thetotal fi)e' costs shown!". "s the point whe$e the sales line inte$sects the +e$tical a)is

6pesos7%. "s the point whe$e the sales line c$osses the total cost lineC. "s the point whe$e the sales line c$osses the ho$i&ontal a)is

6+olume7#. "s the point whe$e the total cost line inte$sects the +e$tical a)is

6pesos7 %oa'illa

--.5hen using con+entional cost,+olume,p$ofit analysis* some

assumptions aout costs an' sales p$ices a$e ma'e. 5hich of thefollowing is one of those assumptions!". The cont$iution ma$gin will change as +olume inc$eases%. The +a$iale cost pe$ unit will 'ec$ease as +olume inc$eases

C. The sales p$ice pe$ unit will $emain constant as +oluminc$eases

#. 9i)e' cost pe$ unit will $emain the same as +olume inc$ease%oa'il

-.Classifying a cost as fi)e' o$ +a$iale 'epen's on how it eha+es". pe$ unit* as the +olume of acti+ity changes.%. in total* as the +olume of acti+ity changes.C. oth " an' % a$e co$$ect.#. none of the ao+e. %oa'il

-2." fi)e' cost is the same pe$centage of sales in th$ee 'iffe$emonths. 5hich of the following is t$ue!". The company ha' the same sales in each of those months.%. The cost is oth fi)e' an' +a$iale.

C. The company is ope$ating at its $ea/,e+en point.#. The company is achie+ing its ta$get le+el of p$ofit. %oa'il

-3.Pe$,unit +a$iale cost". $emains constant within the $ele+ant $ange.%. inc$eases as +olume inc$eases within the $ele+ant $ange.C. 'ec$eases as +olume inc$eases within the $ele+ant $ange.#. 'ec$eases if +olume inc$eases eyon' the $ele+ant $ang

%oa'il

-4.In planning p$o'uct mi) fo$ ma)imum p$ofit* CVP analysis woulstimulate sales of the p$o'uct y inc$easing the:". sales p$ice C. cont$iution ma$gin%. +a$iale cost pe$ unit #. emphasis on custome$ p$io$i

%oa'illa

-." $elati+ely low ma$gin of safety $atio fo$ a p$o'uct is usually ain'ication that the p$o'uct:". is losing money

%. has a high cont$iution ma$ginC. is $is/ie$ than highe$ ma$gin of safety p$o'ucts#. is less $is/y than highe$ ma$gin of safety p$o'ucts %oa'il

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-=.5ithin the $ele+ant $ange* total $e+enues an' total costs". inc$ease* ut at a 'ec$easing $ate. C. $emain

constant.%. 'ec$ease. #. can e g$aphe' as st$aight

lines. %oa'illa

>."n assumption in a CVP analysis is that a change in costs is cause'y a change in". unit 'i$ect mate$ial cost C. sales commission pe$ unit

%oa'illa%. the nume$ of units #. efficiency 'ue to lea$ning

cu$+e effect

1.In CVP analysis* when the nume$ of units changes* which one ofthe following will $emain the same!

". Total sales $e+enues C. Total fi)e' costs%. Total +a$iale costs #. Total cont$iution ma$gin

%oa'illa

(."s fi)e' costs fo$ a fi$m $ise* all othe$ things hel' constant* the$ea/e+en point will". e unchange' C. inc$ease%. not e affecte' y fi)e' costs #. 'ec$ease %oa'illa

-.5hich of the following woul' not affect the $ea/e+en point!". Jume$ of units sol'. C. Total fi)e' costs.%. Va$iale cost pe$ unit. #. Sales p$ice pe$ unit. %oa'illa

.The ma$gin of safety is a /ey concept of CVP analysis. The ma$ginof safety is". The cont$iution ma$gin $ate.%. The 'iffe$ence etween u'gete' cont$iution ma$gin an'

actual cont$iution ma$gin.C. The 'iffe$ence etween u'gete' cont$iution ma$gin an'

$ea/e+en cont$iution ma$gin#. The 'iffe$ence etween u'gete' sales an' $ea/e+en sales.%oa'illa

2." techni


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$ange7. The eL inc$ease in fi)e

costs. %oa'illa

%. " 1>L inc$ease in +a$iale cost pe$ unit. #. " 1>inc$ease in fi)e' cost pe$ unit.

2.If +a$iale cost as a pe$centage of sales inc$eases* the

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#

E

C

%


". cont$iution ma$gin pe$centage inc$eases.%. selling p$ice inc$eases.C. $ea/,e+en point in pesos inc$eases.#. fi)e' costs 'ec$ease. %oa'illa

2=.Int$o'ucing income ta)es into cost,+olume,p$ofit analysis". $aises the $ea/,e+en point.%. lowe$s the $ea/,e+en point.C. inc$eases unit sales nee'e' to ea$n a pa$ticula$ ta$get p$ofit.#. 'ec$eases the cont$iution ma$gin pe$centage. %oa'illa

3>.If a company is ea$ning a p$ofit* its fi)e' costs". a$e less than total cont$iution ma$gin.%. a$e e


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C. inapp$op$iate if a company has al$ea'y estalishe' a ta$getp$ofit.

#. use' in 'ecisions to offe$ a new p$o'uct o$ ente$ a new ma$/et.%oa'illa

3.In o$'e$ fo$ the $ea/,e+en computation to e meaningful tomanagement* sales mi) shoul' e compute' using the". e)pecte' mi) C. most 'esi$ale mi)%. least 'esi$ale mi) #. t$a'itional mi) %oa'illa

3=.5hich of the following is a t$ue statement aout sales mi)!". P$ofits may 'ecline with an inc$ease in total peso of sales if the

sales mi) shifts to sell mo$e of the high cont$iution ma$ginp$o'uct.

%. P$ofits may 'ecline with an inc$ease in total peso of sales if the

sales mi) shifts to sell mo$e of the lowe$ cont$iution ma$ginp$o'uct.

C. P$ofits will $emain constant with an inc$ease in total peso ofsales if the total sales in units $emains constant.

#. P$ofits will $emain constant with a 'ec$ease in total peso of salesif the sales mi) also $emains constant. %oa'illa

PROBLEMS:1. B$een Co$po$ation e)pects to sell -*>>> plants a month. Its

ope$ations manage$ estimate' the following monthly costs:Va$iale costs P 4*2>>9i)e' costs 12*>>>

5hat sales p$ice pe$ plant 'oes she nee' to achie+e to eginma/ing a p$ofit if she sells the estimate' nume$ of plants pe$month!". P4.21 C. P2.>>%. P4.2> #. P(.2> %oa'illa

(

. "n o$gani&ation@s $ea/,e+en point is *>>> units at a sales p$ice ofP2> pe$ unit* +a$iale cost of P-> pe$ unit* an' total fi)e' costs ofP>*>>>. If the company sells 2>> a''itional units* y how muchwill its p$ofit inc$ease!

". P(2*>>> C. P1>*>>>%. P12*>>> #. P1(*>>> %oa'il

-. The Re' 8ions %$othe$hoo' is planning its annual Ri+e$oaE)t$a+agan&a. The E)t$a+agan&a committee has assemle' thfollowing e)pecte' costs fo$ the e+ent:

#inne$ pe$ pe$son P 4>P$og$ams an' sou+eni$ pe$ pe$son ->O$chest$a 12*>>>

Tic/ets an' a'+e$tising 4*>>>Ri+e$oat $ental *>>>9loo$ show an' st$olling ente$tainment 1>*>>>

The committee meme$s woul' li/e to cha$ge P->> pe$ pe$son fothe e+eningAs acti+ities.

"ssume that only (2> pe$sons a$e e)pecte' to atten' th

e)t$a+agan&a* what tic/et p$ice must e cha$ge' to $ea/e+en!". P(> C. P-(>%. P-2> #. P-=> %oa'il

. Consi'e$ the following:9i)e' e)penses P4*>>>?nit cont$iution ma$gin 1(

Ta$get net p$ofit (*>>>How many unit sales a$e $e. Th+a$iale manufactu$ing costs a$e P-> pe$ unit. The fi)emanufactu$ing cost is P1> pe$ unit ase' on the cu$$ent le+el oacti+ity* an' fi)e' selling an' a'minist$ati+e costs a$e P pe$ unit. selling commission of 1>L of the selling p$ice is pai' on each unsol'.

The cont$iution ma$gin pe$ unit is:

". P(. C. P->.%. P-3. #. P2. %oa'il

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3. Seal Ka$' O$naments sells lawn o$naments fo$ P12 each. Seal@scont$iution ma$gin $atio is >L. 9i)e' costs a$e P-(*>>>. Shoul'fi)e' costs inc$ease ->L* how many a''itional units will Seal ha+eto p$o'uce an' sell in o$'e$ to gene$ate the same net p$ofit asun'e$ the cu$$ent con'itions!". 1*3>>. C. 3*=--.%. 2*---. #. 1*>34. %oa'illa

4. "t a $ea/,e+en point of 2*>>> units sol'* +a$iale e)penses we$eP1>*>>> an' fi)e' e)penses we$e P2>*>>>. The p$ofit f$om the2*>>1st unit woul' e!". P1> C. P12%. P2> #. P1( %oa'illa

. Balactica Company has fi)e' costs of P1>>*>>> an' $ea/e+en

sales of P>>*>>>. %ase' on this $elationship* what is its p$o0ecte'p$ofit at P1*(>>*>>> sales!". P 2>*>>> C. P12>*>>>%. P(>>*>>> #. P>>*>>> %oa'illa

=. The sales p$ice pe$ unit will inc$ease f$om P-( to P>. The +a$ialecost pe$ unit will $emain at P(* an' the fi)e' costs will $emainunchange' at P>>*>>>. How many fewe$ units must e sol' to$ea/,e+en at the new sales p$ice of P> pe$ unit!". (2*>>> C. 1>*>>>%. (*2>> #. 1(*2>> %oa'illa

1>. The Ha$' Company sells wi'gets. The company $ea/s e+en at anannual sales +olume of >*>>> units. "t an annual sales +olume of1>>*>>> units the company $epo$ts a p$ofit of P((>*>>>. Theannual fi)e' costs fo$ the Ha$' Company a$e:". P >*>>> C. P >>*>>>%. P1*1>>*>>> #. P1*>>>*>>> %oa'illa

11

. "lat$oss Company has fi)e' costs of P=>*->>. "t a sales +olumeof P-3>*>>>* $etu$n on sales is 1>LM at a P3>>*>>> +olume* $etu$non sales is (>L. 5hat is the $ea/,e+en +olume!". P((2*>>> C. P->1*>>>

%. P(2*>>> #. P(>*>>> %oa'il

1(. "n entity has fi)e' costs of P(>>*>>> an' +a$iale costs pe$ unit P3. It plans on selling >*>>> units in the coming yea$. If the entipays income ta)es on its income at a $ate of >L* what sales p$icmust the fi$m use to otain an afte$,ta) p$ofit of P(*>>> on th>*>>> units!". P11.3> C. P1(.>>%. P11.-3 #. P1(.2> %oa'il

1-. The following is the 8u) Co$po$ation@s cont$iution fo$mat incomstatement fo$ last month:

Sales P(*>>>*>>>8ess +a$iale e)penses 1*>>*>>>Cont$iution ma$gin 3>>*>>>

8ess fi)e' e)penses -3>*>>>Jet income P (>*>>>

The company has no eginning o$ en'ing in+ento$ies. " total >*>>> units we$e p$o'uce' an' sol' last month. 5hat is thcompany@s 'eg$ee of ope$ating le+e$age!". >.1( C. (.2>%. >.> #. -.-> %oa'il

1. #elma$ Company has the oppo$tunity to inc$ease its annual saley P1(2*>>> y selling to a new* $is/ie$ g$oup of custome$s. Thuncollectile e)pense is e)pecte' to e 1>L* an' collection costwill e 1>L. The companyAs manufactu$ing an' selling e)pensea$e 4>L of sales* an' its effecti+e ta) $ate is >L. If #elma$ weto accept this oppo$tunity* the companyAs afte$ ta) p$ofits woulinc$ease y". P 4*2>> C. P1(*2>>%. P 3*>>> #. P12*>>> %oa'il

12. In (>>3 8ucia Company ha' a net loss of P*>>>. The compan

sells one p$o'uct with a selling p$ice of P> an' a +a$iale cost peunit of P3>. In (>>4* the company woul' li/e to ea$n a efo$e,tap$ofit of P>*>>>. How many a''itional units must the compan

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sell in (>>4 than it sol' in (>>3! "ssume that the ta) $ate is >pe$cent.". 1*3>> C. (*>>>%. (*>> #. 2*>> %oa'illa

13. %ulusan Company has sales of P>>*>>> with +a$iale costs ofP->>*>>>* fi)e' costs of P1(>*>>>* an' an ope$ating loss ofP(>*>>>. How much inc$ease in sales woul' %ulusan nee' to ma/ein o$'e$ to achie+e a ta$get ope$ating income of 1>L of sales!". P>>*>>> C. P2>>*>>>%. P3(*>>> #. P>>*>>> %oa'illa

14. The following 'ata apply to #i+a Co$po$ation fo$ the yea$ (>>3:Total +a$iale cost pe$ unit P-.2>Cont$iution ma$ginDsales ->L

%$ea/e+en sales 6p$esent +olume7 P1*>>>*>>>#i+a wants to sell an a''itional 2>*>>> units at the same sellingp$ice an' cont$iution ma$gin pe$ unit. %y how much can fi)e'costs inc$ease to gene$ate a g$oss ma$gin eL of the sales+alue of the a''itional 2>*>>> units to e sol'!". P 2>*>>> C. P 34*2>>%. P 24*2>> #. P1(2*>>> %oa'illa

1. ;a$sman Company ha' a ma$gin of safety $atio of (>L* +a$ialecosts of 3>L of sales* fi)e' costs of P(>*>>>* a $ea/,e+en point ofP3>>*>>>* an' an ope$ating income of P3>*>>> fo$ the cu$$ent yea$.5hat a$e the cu$$ent yea$@s sales!". P 2>>*>>> C. P 42>*>>>%. P 3>>*>>> #. P =>>*>>> %oa'illa

1=. Regal* Inc. sells P$o'uct ; fo$ P2 pe$ unit. The fi)e' costs a$eP(1>*>>> an' the +a$iale costs a$e 3>L of the selling p$ice. 5hatwoul' e the amount of sales if Regal is to $eali&e a p$ofit of 1>L ofsales!

". P4>>*>>> C. P2(2*>>>%. P4(*2>> #. P(>*>>> %oa'illa

(>. The following economic 'ata we$e p$o+i'e' y the co$po$aplanning staff of Hea+en* Inc.:

Sales +olume ->*>>> unitsSales p$ice pe$ unit P->?nit +a$iale costs:

Va$iale manufactu$ing P1-Othe$ +a$iale costs

?nit +a$iale costs P(1?nit cont$iution ma$gin P

9i)e' costs:;anufactu$ing P12>*>>>Othe$ fi)e' costs P 2>*>>>

Total fi)e' costs P(>>*>>>The management is consi'e$ing installing a new* automate

manufactu$ing p$ocess that will inc$ease fi)e' costs y P2>*>>> an$e'uce +a$iale manufactu$ing cost y P- pe$ unit. Thmanagement set a ta$get a p$ofit of P4>*>>> efo$e an' afte$ thac


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%. P-*2>>*>>>. #. P2*->>*>>>. %oa'illa

((. The E)p$essi+e Company cu$$ently has fi)e' cost of P44>*2>>. Thiscost is e)pecte' to inc$ease y P1>-*2>> if the company e)pan'sits p$o'uction facilities. Cu$$ently* it sells its p$o'uct fo$ P4. Thep$o'uct has a +a$iale cost pe$ unit of P(. How many mo$e unitsmust the company sell to $ea/ e+en* at the cu$$ent sales p$ice pe$unit* than it 'i' to $ea/ e+en p$io$ to the inc$ease in fi)e' cost!". -*2>> C. *2>>%. *>>> #. 3*>>> %oa'illa

(-. The Tan/e$ Company estimate' the following 'ata fo$ the comingyea$:

9i)e' manufactu$ing costs P232*>>>Va$iale p$o'uction costs pe$ peso of sales

;ate$ials P >.1(2#i$ect lao$ >.12>Va$iale o+e$hea' >.>42Va$iale selling costs pe$ peso of sales >.12>

Tan/e$ estimates its sales fo$ the coming yea$ to e P(*>>>*>>>.

The e)pecte' cost of goo's sol' fo$ the coming yea$ is". P1*(32*>>> C. P1*232*>>>%. P1*112*>>> #. P 4>>*>>> %oa'illa

(. "t a sales +olume le+el of (*(2> units* %alua$te CompanyAscont$iution ma$gin is one an' one,half of the fi)e' costs ofP-3*>>>. Cont$iution ma$gin is ->L How much peso sales shoul'the %alua$te Company sell to ea$n 1> pe$cent of sales!". P(4>*>>> C. P-3>*>>>%. P1>*>>> #. P2>*>>> %oa'illa

(2. The "lpine CompanyAs yea$,en' income statement is as follows:Sales 6(>*>>> units7 P-3>*>>>

Va$iale costs ((>*>>>Cont$iution ma$gin P1>*>>>9i)e' costs 1>2*>>>Jet income P -2*>>>

"lpineAs management is unhappy with the $esults an' plans tma/e some changes fo$ ne)t yea$. If management implements new ma$/eting p$og$am* fi)e' costs a$e e)pecte' to inc$ease P1=*(>> an' +a$iale costs to inc$ease y P1 pe$ unit. ?nit salea$e e)pecte' to inc$ease y 12 pe$cent.

5hat is the effect on income if the fo$egoing changes a$implemente'!". 'ec$ease of P(1*(>> C. inc$ease of P 1*>>%. inc$ease of P1-*>> #. inc$ease of P1*>> %oa'il

(3. ;e$ca'o* Inc. ha' the following economic 'ata fo$ (>>4:Jet sales P>>*>>>Cont$iution ma$gin 13>*>>>;a$gin of safety >*>>>

5hat is ;e$ca'oAs $ea/e+en point in (>>4!". P-3>*>>> C. P-(>*>>>%. P(*>>> #. P >*>>> %oa'il

(4. ;a$*>>>* +a$iale costs of P2>*>>>* an' fi)ecosts of P->*>>>. ;a$L. If the (>>4 p$o0ections a$e $eali&e'* nincome in (>>4 shoul' e)cee' net income in (>>3 y". 1>>L C. (>L%. >L #. 2>L %oa'il

(. %elow is the income statement fo$ Ha$po Co. fo$ (>>3:Sales P>>*>>>Va$iale costs 6 1(2*>>>7Cont$iution ma$gin P(42*>>>9i)e' costs 6 (>>*>>>7P$ofit efo$e ta) P 42*>>>

"ssuming that the fi)e' costs a$e e)pecte' to $emain at P(>>*>>fo$ (>>4* an' the sales p$ice pe$ unit an' +a$iale cost pe$ unit a$also e)pecte' to $emain constant* how much p$ofit efo$e ta) w

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e p$o'uce' if the company anticipates (>>4 sales $ising to 1->Lof the (>>3 le+el!". P =4*2>> C. P1=2*>>>%. P124*2>> #. P1>*>>> %oa'illa

(=. "lmos Co$po$ation p$o'uces a p$o'uct that sells fo$ P1> pe$ unit.The +a$iale cost pe$ unit is P3 an' total fi)e' costs a$e P1(*>>>."t this selling p$ice* the company ea$ns a p$ofit eL oftotal peso sales. %y $e'ucing its selling p$ice to P= pe$ unit* themanufactu$e$ can inc$ease its unit sales +olume y (2L. "ssumethat the$e a$e no ta)es an' that total fi)e' costs an' +a$iale costpe$ unit $emain unchange'. If the selling p$ice we$e $e'uce' to P=pe$ unit* the companyAs p$ofit woul' ha+e een". P-*>>>. C. P2*>>>.%. P*>>>. #. P3*>>>. %oa'illa

->. Info$mation conce$ning the (>>4 financial p$o0ections of the Sil+e$Company is as follows:

Jet sales of P-*>>>*>>>.9i)e' costs of P>>*>>>.P>.32 inc$ease in cost of sales fo$ each peso inc$ease in net

sales.5hat is the p$o0ecte' cost of sales fo$ (>>4!". P =2>*>>> C. P1*>2>*>>>%. P(*42>*>>> #. P1*2>*>>> %oa'illa

-1. The Chil'less Company sells wi'gets. The company $ea/s e+en atan annual sales +olume of 42*>>> units.

"ctual annual sales +olume was 1>>*>>> units* an' the company$epo$te' a p$ofit of P(>>*>>>. The annual fi)e' costs fo$ theChil'less Company a$e". P>>*>>> C. P(>>*>>>%. P3>>*>>> #. P12>*>>> %oa'illa

-(. The costs to p$o'uce (*>>> units at 4>L capacity a$e:#i$ect mate$ials P-3*>>>#i$ect lao$ 2*>>>

9acto$y o+e$hea'* all fi)e' (=*>>>Selling e)pense 6-2L +a$iale* 32L fi)e'7 (*>>>

5hat unit p$ice woul' the company ha+e to cha$ge to ma/e P(*(2on a sale of 1*2>> a''itional units that woul' e shippe' out of thno$mal ma$/et a$ea!". P2.1> C. P.1>%. P2.3> #. P2.>> %oa'il

--. The ;an'a$in Company@s p$o'uct mi) inclu'es P4(>*>>> in sale N an' P3>*>>> in sale of K. N@s cont$iution ma$gin is 3>L an' Kis >L of sales. 9i)e' costs amount to P2>2*1. K@s sale $ea/e+en point shoul' amount to". P3>*>>> C. P2(=*=>%. P4(>*>>> #. P4>*2=> %oa'il

-. 8e+iAs Company has $e+enues of P2>>*>>>* +a$iale costs P->>*>>>* an' p$eta) p$ofit of P12>*>>>. Ha' the companinc$ease' the sales p$ice pe$ unit y 1>L* $e'uce' fi)e' costs (>L* an' left +a$iale cost pe$ unit unchange'* what woul' the ne$ea/e+en point in pesos ha+e een!". P *>>> C. P1>>*>>>%. P >*>>> #. P1(2*>>> %oa'il

-2. " fi$m has fi)e' costs of P(>>*>>> an' +a$iale cost pe$ unit of PIt plans to sell >*>>> units in the coming yea$. If the fi$m payincome ta)es on its income at a $ate of >L* what sales p$ice musthe fi$m use to otain an afte$,ta) p$ofit of P(*>>>!". P11.3> C. P11.-3%. P1(.>> #. P1(.2> %oa'il

-3. %elow is the income statement fo$ %len'e$ Co. fo$ (>>4:Sales P>>*>>>Va$iale costs 61(2*>>>7

Cont$iution ma$gin P(42*>>>9i)e' costs 6 (>>*>>>7P$ofit efo$e ta) P 42*>>>

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5hat is the 'eg$ee of ope$ating le+e$age fo$ %len'e$ Company fo$(>>4!

". -.34 C. 2.--%. 1.2 #. 1.34 %oa'illa

-4. 9oo' 9acto$y* Inc. sells loose iscuits fo$ P2 pe$ unit. The fi)e'costs a$e P(1>*>>> an' the +a$iale costs a$e 2L of the sellingp$ice. 5hat woul' e the amount of sales if 9oo' 9acto$y* Inc. we$eto $eali&e a p$ofit of 12L of sales!". P4>>*>>> C. P2(2*>>>%. P4(*2>> #. P(>*>>> %oa'illa

-. The Opposition Sales Co$po$ation is e)pecting an inc$ease of fi)e'costs y P4*42> upon mo+ing thei$ place of usiness to the'owntown a$ea. The company anticipates that the selling p$ice pe$

unit an' the +a$iale e)penses will not change. "t p$esent* thesales +olume necessa$y to $ea/e+en is P42>*>>> ut with thee)pecte' inc$ease in fi)e' costs* the sales +olume necessa$y to$ea/e+en woul' go up to P=42*>>>.

%ase' on these p$o0ections* what we$e the total fi)e' costs efo$ethe inc$ease of P4*42>!". P-1*(2> C. P1-*42>%. P(3(*2>> #. P->>*>>> %oa'illa

-=. "t >*>>> units of sales* %ene+olent Co$po$ation ha' an ope$atingloss of P-.>> pe$ unit. 5hen sales we$e 4>*>>> units* the companyha' a p$ofit of P1.(> pe$ unit. The nume$ of units to $ea/e+en is". -2*>>> C. 2*>>>%. 2(*2>> #. 24*34 %oa'illa

>. The following info$mation pe$tains to Hennin Co$po$ation fo$ theyea$ en'ing #eceme$ -1* (>>3:

%u'gete' sales P1*>>>*>>>

%$ea/e+en sales 4>>*>>>%u'gete' cont$iution ma$gin 3>>*>>>Cashflow $ea/e+en (>>*>>>

The ma$gin of safety fo$ the Hennin Co$po$ation is:

". P->>*>>> C. P2>>*>>>%. P>>*>>> #. P>>*>>> %oa'il

1. %aloa* Inc. ha' the following economic info$mation fo$ the yea(>>3:

Sales 62>*>>> units P(>7 P1*>>>*>>>Va$iale manufactu$ing costs >>*>>>9i)e' costs (2>*>>>Income ta) $ate > pe$cent

%aloa* Inc. u'gets its (>>4 sales at 3>*>>> units o$ P1*(>>*>>>The company anticipates an inc$ease' competitionM hence* aa''itional P42*>>> a'+e$tising costs is u'gete' in o$'e$ tmaintain its sales ta$get fo$ (>>4.

5hat is the amount of peso sales nee'e' fo$ (>>4 in o$'e$ to e>3!". P1*1(2*>>> C. P1*-(2*>>>%. P1*14*2>> #. P1*-4*2>> %oa'il

(. ;au$esmo Company 'e+elope' the following info$mation fo$ thyea$ en'e' #eceme$ -1* (>>4:

P$o'uct " P$o'uct % Total

?nits Sol' *>>> 3*>>> 1>*>>>

Sales P1(*>>> P(4*>>> P-=*>>>Va$iale costs 3*>>> 12*>>> (1*>>>Cont$iution ma$gin P 3*>>> P1(*>>> 1*>>>9i)e' costs 1(*3>>

Jet income P 2*>>

If the sales mi) changes to 2*>>> units of P$o'uct " an' 2*>>> unitof P$o'uct %* the effect on the companyAs $ea/,e+en point woue". to inc$ease it y (>> units. C. to inc$ease it y 1*(>> units.%. to 'ec$ease it y (>> units. #. no change. %oa'il

-. ;eno$ Company sells two p$o'ucts with the following pe$ unit 'ata

Stan'a$' #elu)eSelling p$iceDunit P42 P1(>

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Va$iale costsDunit 2 3>Cont$iution ma$ginDunit P-> P 3>Sales mi) - (

If fi)e' costs a$e P3->*>>>* the nume$ of stan'a$' an' 'elu)eunits that ;eno$ must sell to $ea/ e+en is %oa'illa". 1*>> stan'a$' an' 1*(>> 'elu)e.C. =*>>> stan'a$' an' 3*>>>

'elu)e.%. -*3>> stan'a$' an' (*>> 'elu)e.#. (1*>>> stan'a$' an'

1*>>> 'elu)e.

. The following a$e p$o0ections aout the two p$o'ucts of #o$ineCompany* aules an' t$in/ets* fo$ the coming yea$:

%aules T$in/ets?nits "mou

nt?nits "mou

ntTotal

Sales 1>*>>>

P1>*>>>

4*2>> P1>*>>>

P(>*>>>

Costs9i)e' P

(*>>>P

2*3>>P

4*3>>Va$iale 3*>>

> -*>>

> =*>

>>P

*>>>P

*3>>P13*3

>>Income efo$eta)es

P(*>>>

P1*>>

P-*>>

"ssuming that the custome$s pu$chase composite units of fou$aules an' th$ee t$in/ets* the $ea/e+en output fo$ the twop$o'ucts woul' e

%oa'illa ". %. C. #.%aules 3*=>= 3*=>= 2*>>> 2*>>>

T$in/ets 3*=>= 2*1( *>>> 3*>>>

2. The sales mi) fo$ #ial Ente$p$ise is as follows:

P$o'uct ": 1( units P2.(2 sales p$iceM P.2 +a$iale cost pe$unit.

P$o'uct %: 1> units P4.2> sales p$iceM P3.=2 +a$iale cost pe$unit.

P$o'uct C: 3 units P1(.(2 sales p$iceM P1>.-2 +a$iale cost peunit.

#ial Ente$p$ise@s fi)e' costs a$e P42*=2>.

5hat a$e the composite $ea/,e+en point!". =*>>> C. -*2>>%. (*>>> #. *>>> %oa'il

3. "le)an'$a Co. p$o+i'es two p$o'ucts* Vel+et an' Cotton. Vel+accounts fo$ 3> pe$cent of total sales. The +a$iale costs as pe$centage of selling p$ices a$e 3>L fo$ Vel+et an' 2L fo$ Cotton

Total fi)e' costs a$e P((2*>>>.

If fi)e' costs will inc$ease y -> pe$cent* what amount of peso sale

woul' e necessa$y to gene$ate an ope$ating p$ofit of P*>>>!". P1*-2>*>>> C. P1*1-2*>>>%. P 3*(2 #. P =1>*>>> %oa'il

4. 8ast month* amo$a Company ha' an income of P>.42 pe$ unit wisales of 3>*>>> units. #u$ing the cu$$ent month when the unit salea$e e)pecte' to e only 2*>>>* the$e is a loss of P1.(2 pe$ uni%oth the +a$iale cost pe$ unit an' total fi)e' costs $emaconstant.

The fi)e' costs amounte' to". P >*>>> C. P-3>*>>>%. P(4*2>> #. P(1>*>>> %oa'il

. %ytes Company is a $etaile$ of +i'eo 'is/s. The p$o0ecte' afte$,taincome fo$ the cu$$ent yea$ is P1(>*>>> ase' on a sales +olume (>>*>>> +i'eo 'is/s. %ytes has een selling the 'is/s at P13 eac

The +a$iale costs consist of the P1> pe$ unit pu$chase p$ice of th'is/s an' a han'ling cost of P( pe$ 'is/. %ytesA annual fi)e' cos

a$e P3>>*>>>* an' %ytes is su0ect to a >L income ta) $at;anagement is planning fo$ the coming yea$ when it e)pects thathe unit pu$chase p$ice of the +i'eo 'is/s will inc$ease ->L.

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%ytes CompanyAs $ea/e+en point fo$ the cu$$ent yea$ in nume$ of+i'eo 'is/s is

". 1>>*>>> units C. 2>*>>> units%. 12>*>>> units #. 3>*>>> units %oa'illa

=. "lon&o Co$po$ation ha' sales of P1(>*>>> fo$ the month of ;ay. Ithas a ma$gin of safety $atio of (2 pe$cent* an' an afte$,ta) $etu$non sales of 3 pe$cent. The company assumes its sales eingconstant e+e$y month. If the ta) $ate is > pe$cent* how much is theannual fi)e' cost!". P -3*>>> C. P =>*>>>%. P-(*>>> #. P-3>*>>> %oa'illa

2>. Cultu$e' Company is a manufactu$e$ of its only one p$o'uct line. Itha' sales of P>>*>>> fo$ (>>4 with a cont$iution ma$gin $atio of

(> pe$cent. Its ma$gin of safety $atio was 1> pe$cent.

5hat a$e the companyAs fi)e' costs!". P 4(*>>> C. P >*>>>%. P(*>>> #. P-(>*>>> %oa'illa

21. Bla$eless Company manufactu$es an' sells sunglasses. The p$icean' cost 'ata a$e as follows:

Selling p$ice pe$ pai$ of Sunglasses P(2.>>Va$iale costs pe$ pai$ of sunglasses:Raw mate$ials P11.>>#i$ect lao$ 2.>>;anufactu$ing o+e$hea' (.2>Selling e)penses 1.->

Total +a$iale costs pe$ unit P1=.>"nnual fi)e' costs:;anufactu$ing o+e$hea' P1=(*>>>Selling an' a'minist$ati+e (43*>>>

Total fi)e' costs P3*>>>

9o$ecaste' annual sales +olume 61(>*>>> pai$s7P-*>>>*>>>Income ta) $ate >L

Bla$eless Company estimates that its 'i$ect lao$ costs will inc$eas pe$cent ne)t yea$. How many units will Bla$eless ha+e to sene)t yea$ to $each $ea/e+en!". =4*2>> units C. 1>1*4> units%. -*24( units #. 3*(2> units %oa'il

2(. Santos Company is planning its a'+e$tising campaign fo$ ne)t yeaan' has p$epa$e' the following u'get 'ata ase' on a &ea'+e$tising e)pen'itu$e:

Jo$mal plant capacity (>>*>>> unitsSales 12>*>>> unitsSelling p$ice P(2 pe$ unitVa$iale manufactu$ing costs P12 pe$ unit9i)e' manufactu$ing costs P>>*>>>9i)e' selling costs P4>>*>>>

"n a'+e$tising agency claims that an agg$essi+e a'+e$tisincampaign woul' enale Santos to inc$ease its unit sales y (>L5hat is the ma)imum amount that Santos Company can pay foa'+e$tising an' ha+e an ope$ating p$ofit of P(>>*>>> ne)t yea$!". P1>>*>>> C. P->>*>>>%. P(>>*>>> #. P22>*>>> %oa'il

2-. "'+entu$ous Co. is consi'e$ing '$opping a p$o'uct. Va$iale cosa$e P3>.>> pe$ unit. 9i)e' o+e$hea' costs* e)clusi+e 'ep$eciation* ha+e een allocate' at a $ate of P-.2> pe$ unit anwill continue whethe$ o$ not p$o'uction ceases. #ep$eciation othe e*>>> a yea$. If p$o'uction is stoppe'* the> a unit. Igno$ing ta)es* thminimum nume$ of units to e sol' in the cu$$ent yea$ to $eae+en on a cash flow asis is". 1*2>> units. C. *(2> units.%. 3*42> units. #. =*42> units %oa'il

2. Pansipit Company ha' a (2 pe$cent ma$gin of safety. Its afte$,ta$etu$n on sales is 3 pe$cent. The companyAs income is su0ect to ta

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$ate of > pe$cent. If fi)e' costs amount to P-(>*>>>* how muchpeso sales 'i' Pansipit ma/e fo$ the yea$!". P1*>33*334 C. P1*(>*>>>%. P1*>>>*>>> #. P >>*>>> %oa'illa

22. The management of ;esa Company has pe$fo$me' cost stu'ies an'has p$o0ecte' the following annual costs ase' on 3>*>>> units ofp$o'uction an' sales:

Total "nnualCosts

Pe$cent of Va$iale Po$tion of Total"nnual Costs

#i$ectmate$ial

P3>>*>>> 1>>

#i$ectlao$

4(>*>>> >

;fg.

O+e$hea'

>>*>>> 2>

Sellingcosts

1=(*2>> (2

5hat selling p$ice will yiel' a 12 pe$cent p$ofit f$om sales of 3>*>>>units!

". P1.34 C. P(4.->%. P-4.2> #. P-2.( %oa'illa

23. The following 'ata $elate to Ha$+este$ Company which sells a singlep$o'uct:

?nit selling p$ice P >.>>Pu$chase cost pe$ unit 22.>>Sales commission 12 L of selling p$ice 1(.>>;onthly fi)e' costs P1>*>>>

The fi$mAs two salespe$sons woul' li/e to change thei$compensation f$om a 12 pe$cent commission to a 4.2 pe$centcommission plus P12*>>> each pe$ month in fi)e' sala$y. Cu$$ently*they only $ecei+e commissions as thei$ compensation.

"t what sales +olume in units woul' the two cost st$uctu$es ein'iffe$ent!". (*2>> units C. *>>> units%. -*>>> units #. 2*>>> units %oa'illa

24. ;ulti9$ame Company has the following $e+enue an' cost u'gefo$ the two p$o'ucts it sells:

Plastic 9$ames Blass 9$amesSales p$ice P1>.>> P12.>>#i$ect mate$ials 6 (.>>7 6 -.>>7#i$ect lao$ 6 -.>>7 6 2.>>79i)e' o+e$hea' 6 -.>>7 6 (.427Jet income pe$unit

P (.>> P .(2

%u'gete' unitsales

1>>*>>> ->>*>>>

The u'gete' unit sales e>3* St. Paul 8a supplie' hospitals with a comp$ehensi+'iagnostic /it fo$ P1(>. "t a +olume of >*>>> /its* St. Paul hafi)e' costs of P1*>>>*>>> an' ope$ating income efo$e incomta)es of P(>>*>>>. %ecause of an a'+e$se legal 'ecision* St. Paul(>>4 liaility insu$ance inc$ease' y P1*(>>*>>> o+e$ (>>"ssuming the +olume an' othe$ costs a$e unchange'* what shouthe (>>4 p$ice e if St. Paul is to ma/e the same P(>>*>>ope$ating income efo$e income ta)es!". P1(> C. P12>%. P1-2 #. P(> %oa'il

2=. The following 'ata $elate to He$e$t Company which sells a singp$o'uct:

?nit selling p$ice P (>.>>Pu$chase cost pe$ unit 11.>>Sales commission* 1>L of selling p$ice (.>>;onthly fi)e' costs P>*>>>

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The fi$mAs salespe$sons woul' li/e to change thei$ compensationf$om a 1> pe$cent commission to a 2 pe$cent commission plusP(>*>>> pe$ month in sala$y. Cu$$ently* they only $ecei+ecommissions as thei$ compensation.

The change in compensation plan shoul' change the monthly$ea/e+en point y". 1*>41 Inc$ease C. 1*2- Inc$ease%. 1*>41 #ec$ease #. 1*2- #ec$ease %oa'illa

3>. The manage$ of Jaughty 9oo' Company $e+iewe' the following'ata:

9$uits ;eat Canne'P$o'ucts

Cont$iution ma$gin

$atio

>L 2>L >L

Sales mi) in pesos (>L ->L 2>L

9i)e' costs* P1*(=>*>>> pe$ month.The $ea/e+en sales fo$ each month is". P1*344*>>> C. P*2>>*>>>%. P-*>>>*>>> #. P3*>>>*>>> %oa'illa

31. The O$egano 5atch Company manufactu$es a line of la'iesAwatches which a$e sol' th$ough 'iscount houses. Each watch issol' fo$ P1*2>>M the fi)e' costs a$e P-*3>>*>>> fo$ ->*>>> watcheso$ lessM +a$iale cost is P=>> pe$ watch.

5hat is O$eganoAs 'eg$ee of ope$ating le+e$age at sales of 1(*>>>watches!

". (.>N C. >.2N%. 2.>N #. >.(N %oa'illa

3(. #u/e* Inc. owns an' ope$ates a chain of foo' cente$s. Themanagement is consi'e$ing installing machines that will ma/e

popco$n on the p$emises. These machines a$e a+ailale in two'iffe$ent si&es with the following 'etails:

Economy Regula$"nnual capacity (>*>>> 2>*>>>

Costs: "nnual machine$ental

P3>*>>>.>> P(*2>>.>>

Popco$n cost pe$ o) -.=> -.=>Cost of each o) >.> >.>Othe$ +a$iale cost pe$ o) 3.3> .(>

The le+el of output in o)es at which the Economy an' the Regulawoul' ea$n the same p$ofit 6loss7 is". (>*>>> o)es C. 12*>>> o)es%. =*-42 o)es #. 1(*2>> o)es %oa'il

3-. The Ha$pe$ Co$po$ation manufactu$es an' sells T,shi$ts imp$intewith college names an' slogans. 8ast yea$* the shi$ts sol' fo$ P4.2each* an' the +a$iale cost to manufactu$e them was P(.(2 peunit. The company nee'e' to sell (>*>>> shi$ts to $ea/ e+en. Thnet income last yea$ was P2*>>. Ha$pe$As e)pectations fo$ th

coming yea$ inclu'e the following:1. The sales p$ice of the T,shi$ts will e P=(. Va$iale cost to manufactu$e will inc$ease y one,thi$'-. 9i)e' costs will inc$ease y 1>L. The income ta) $ate of >L will e unchange'

The selling p$ice that woul' maintain the same cont$iution ma$g$ate as last yea$ is

". P =.>> C. P1>.>>%. P .(2 #. P =.42 %oa'il

3. #u$ing the month of Fune* "$mani Co$po$ation p$o'uce' 1(*>>units an' sol' them fo$ P(> pe$ unit. Total fi)e' costs fo$ the pe$iowe$e P12*>>>* an' the ope$ating p$ofit was P(3*>>>. The +a$iacost pe$ unit fo$ Fune was". P.2> C. P3.>>%. P2.>> #. P4.14 %oa'il

32. Stone Company plans to sell >>*>>> laun'$y hange$s. The fi)ecosts a$e P3>>*>>>* an' the +a$iale cost is 3>L of the sellin

p$ice. If the company wants to $eali&e a p$ofit of P1(>*>>>* thselling p$ice of each laun'$y hange$ must e". P(.2> C. P.2>%. P-.42 #. P2.>> %oa'il

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33. The unit cont$iution ma$gin of P$o'uct " is P(> an' of P$o'uct % isP13. If si) units of P$o'uct " an' eight units of P$o'uct % can ep$o'uce' pe$ machine hou$* the cont$iution ma$gin of thep$o'ucts pe$ machine hou$ is %oa'illa". P$o'uct "* P13>M P$o'uct %* P=3 C. P$o'uct "* P-.--M P$o'uct

%* P(.>>%. P$o'uct "* P1(>M P$o'uct %* P1(#. P$o'uct "* P-(.>>M

P$o'uct %* P->.>>

34. The %itte$sweet Company is a wholesale 'ist$iuto$ of can'y. Thecompany se$+ices +a$ious g$oce$y* con+enience* an' '$ug sto$es in;et$o ;anila. Small* ut stea'y g$owth in sales* has een achie+e'y the company o+e$ the past few yea$s while can'y p$ices ha+eeen inc$easing. The company is fo$mulating its plans fo$ the

coming fiscal yea$. P$esente' elow a$e the 'ata use' to p$o0ectthe cu$$ent yea$As afte$,ta) net income of P11>*>>.

"+e$age selling p$ice P.>> pe$ o)"+e$age +a$iale costs Cost of can'y P(.>> pe$ o) Selling e)penses >.> pe$ o) Total P(.> pe$ o)

"nnual fi)e' costs: Selling P 13=*>>> "'minist$ati+e (>*>>> Total P >*>>>E)pecte' annual sales +olume 6-=>*>>> o)es7P1*23>*>>>

The manufactu$e$s of can'ies ha+e announce' that they willinc$ease p$ices of thei$ p$o'ucts an a+e$age of 12L in the comingyea$ 'ue to inc$eases in $aw mate$ial 6suga$* cocoa* peanuts* etc.7an' lao$ costs. %itte$sweet Company e)pects that all othe$ costswill $emain at the same $ates o$ le+els as the cu$$ent yea$.%itte$sweet is su0ect to > pe$cent ta) $ate.

If net income afte$ ta)es woul' $emain the same afte$ the cost ofcan'y inc$eases ut no inc$ease in the sales p$ice is ma'e* howmany o)es of can'y must %itte$sweet sell!

". >*>>> C. >>*>>>%. (4*3>> #. (=*->> %oa'il

3. 8a$& Company p$o'uces a single p$o'uct. It sol' (2*>>> units layea$ with the following $esults:

Sales P3(2*>>>

Va$iale costs P-42*>>>9i)e' costs 12>*>>> 2(2*>>>Jet income efo$eta)es

P1>>*>>>

Income ta)es >*>>>Jet income P 3>*>>>

In an attempt to imp$o+e its p$o'uct in the coming yea$* 8a$& iconsi'e$ing $eplacing a component pa$t in its p$o'uct that has cost of P(.2> with a new an' ette$ pe$ un" new machine will also e nee'e' to inc$ease plant capacity. Thmachine woul' cost P1*>>> with a useful life of 3 yea$s an' nsal+age +alue. The company uses st$aight,line 'ep$eciatiometho' on all plant assets.

If 8a$& wishes to maintain the same cont$iution ma$gin $atio afteimplementing the changes* what selling p$ice pe$ unit of p$o'ucmust it cha$ge ne)t yea$ to co+e$ the inc$ease' mate$ial costs!". P(4.>> C. P(2.>>%. P-(.2> #. P(.-- %oa'il

3=. %; ;oto$s* Inc. employs > sales pe$sonnel to ma$/et its line oeconomy automoiles. The a+e$age ca$ sells fo$ P1*(>>*>>> an' 3L commission is pai' to the salespe$son. %; ;oto$s consi'e$ing a change to a commission a$$angement that woul' paeach salespe$son a sala$y of P(*>>> pe$ month plus a commissioof (L of the sales ma'e y that salespe$son.

The amount of total ca$ sales at which the two e)pense st$uctu$e

woul' e in'iffe$ent is". P((*2>>*>>> C. P->*>>>*>>>%. P(*>>>*>>> #. P1(*>>>*>>> %oa'il

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4>. Roun' Company is a g$oce$y sto$e that is cu$$ently open only;on'ay th$ough Satu$'ay. Roun' Company is consi'e$ing openingon Sun'ays. The annual inc$emental costs of Sun'ay openings a$eestimate' at P-1*(>>. Roun'As g$oss ma$gin on sales is (2 pe$cent.Roun' estimates that 42 pe$cent of its Sun'ay sales to custome$swoul' e ma'e on othe$ 'ays if the sto$e we$e not open onSun'ays.

The one,'ay +olume of Sun'ay sales that woul' e necessa$y fo$Roun' to attain the same wee/ly ope$ating as the cu$$ent si),'aywee/ is". P(*>> C. P=*3>>%. P-*(>> #. P=*= %oa'illa

41. "ilu Company has the following ope$ating 'ata fo$ its

manufactu$ing ope$ations:?nit selling p$ice P (2>?nit +a$iale cost 1>>

Total fi)e' costs >*>>>The companyAs 'ecision to inc$ease the wages of hou$ly wo$/e$swill inc$ease the unit +a$iale cost y 1> pe$cent. Inc$eases in thesala$ies of facto$y supe$+iso$s an' p$ope$ty ta)es fo$ the facto$ywill inc$ease fi)e' costs y pe$cent. If sales p$ice is hel'constant* the ne)t $ea/,e+en point fo$ "ilu Company will e". Inc$ease' y 3> units. C. #ec$ease' y 3> units.%. Inc$ease' y >> units. #. Inc$ease' y >> units.

%oa'illa

4(. Sola$ Company sells two p$o'ucts* %iggs an' %oggs. 8ast yea$*Sola$ Company sol' 1(*>>> units of %iggs an' (*>>> units of%oggs.

Relate' 'ata fo$ last yea$ a$e:

P$o'uct ?nit Sel ling P$ice ?nit Va$iale

Cost

?nit Cont$iution

;a$gin%iggs P1(> P> P>%oggs > 3> (>

"ssuming that last yea$As fi)e' costs totale' P=1>*>>>* what waSola$ CompanyAs composite $ea/,e+en point!". -*1(2 C. 11*-42%. (4*->( #. =*1>1 %oa'il

4-. Ri+e$ an' Co.* ma/e$ of >Dpipe

Total +a$iale costs P1-4.2>Dpipe9i)e' costs:;anufactu$ing P (2>*>>>Selling >>*>>>"'minist$ati+e 4>>*>>>

Total fi)e' costs P1*-2>*>>>

Selling p$ice* pe$ pipe P (2>.>>E)pecte' sales* (>>4 6(>*>>> units7 P2*>>>*>>>

Ta) $ate: >LThe company has set the sales ta$get fo$ (>>4 at a le+el P2*2>>*>>> 6o$ ((*>>> pipes7.

If an a''itional P11(*2>> ha+e to e spent fo$ a'+e$tising in (>>4what is the $e


20/52


4. "'oe Company sol' 1>>*>>> units of its p$o'uct at P(> pe$ unit.Va$iale costs we$e P1 pe$ unit* consisting of manufactu$ing costsof P11 an' selling costs of P-. 9i)e' costs* which we$e incu$$e'unifo$mly th$oughout the yea$* amounte' to P4=(*>>>6manufactu$ing costs of P2>>*>>> an' selling e)penses ofP(=(*>>>7. The$e ha' een no eginning o$ en'ing in+ento$ies.

If lao$ costs comp$ise of 2> pe$cent +a$iale costs an' (> pe$cent ffi)e' costs* a 1> pe$cent inc$ease in wages an' sala$ies woul'inc$ease the nume$ of units $e. The salespeople $ecei+e a sala$y

plus a commission of 2L of sales. 8ast yea$ the co$po$ationAs netincome was P1>>*>>. The co$po$ation is su0ect to ->L incometa) $ate. The fi)e' costs of the company a$e:

"'+e$tising P1(*>>>Rent 3>*>>>Sala$ies 1>*>>>Othe$ fi)e' costs -(*>>>

Total P-=3*>>>The company is consi'e$ing changing the compensation plan fo$sales pe$sonnel. If the o$gani&ation inc$eases the commission to1>L of $e+enues an' $e'uces sala$ies y P>*>>>* what $e+enuesmust the o$gani&ation ha+e to $aise in o$'e$ to ea$n the same netincome as last yea$!". P1*3>>*>>> C. P1*-2>*>>>%. P1*12>*>>> #. P1*3->*>>> %oa'illa

43. Tactless ;anufactu$ing Company p$o'uces two p$o'ucts fo$ whichthe following 'ata ha+e een taulate'. 9i)e' manufactu$ing costis applie' at a $ate of P1.>> pe$ machine hou$.

Pe$ ?nit NK,4 %#,Selling p$ice P.>> P-.>>Va$iale manufactu$ing cost P(.>> P1.2>9i)e' manufactu$ing cost P>.42 P>.(>

Va$iale selling cost P1.>> P1.>>

The sales manage$ has ha' a P13>*>>> inc$ease in the u'geallotment fo$ a'+e$tising an' wants to apply the money to the mop$ofitale p$o'uct. The p$o'ucts a$e not sustitutes fo$ onanothe$ in the eyes of the companyAs custome$s.

The manage$ may 'e+ote the enti$e P13>*>>> to inc$easea'+e$tising fo$ eithe$ NK,4 o$ %#,.

Suppose Tactless has only 1>>*>>> machine hou$s that can ma'e a+ailale to p$o'uce a''itional units of NK,4 an' %#,. If thpotential inc$ease in sales units fo$ eithe$ p$o'uct $esulting f$oma'+e$tising is fa$ in e)cess of this p$o'uction capacity* whicp$o'uct shoul' e a'+e$tise' an' what is the estimate' inc$ease cont$iution ma$gin ea$ne'! %oa'il

". P$o'uct NK,4 shoul' e p$o'uce'* yiel'ing a cont$iution ma$gof P42*>>>.

%. P$o'uct NK,4 shoul' e p$o'uce'* yiel'ing a cont$iution ma$gof P1--*---.

C. P$o'uct %#, shoul' e p$o'uce'* yiel'ing a cont$iution ma$gof P14*2>>.

#. P$o'uct %#, shoul' e p$o'uce'* yiel'ing a cont$iution ma$gof P(2>*>>>.

44. #$ape Co$p. woul' li/e to ma$/et a new p$o'uct at a selling p$ice P12 pe$ unit. 9i)e' costs fo$ this p$o'uct a$e P1*>>>*>>> fo$ lethan 2>>*>>> units of output an' P1*2>>*>>> fo$ 2>>*>>> o$ mo$units of output. The cont$iution ma$gin pe$centage is -2L. Homany units of this p$o'uct must e sol' to ea$n a ta$get ope$atinincome of P1 million!". -33*334 C. 43*1=>%. ->*=2( #. (23*1> %oa'il

4. Ca$e Company sol' 1>>*>>> units of its p$o'uct at P(> pe$ un

Va$iale costs a$e P1 pe$ unit* consisting of manufactu$ing costs oP11 an' selling costs of P-. 9i)e' costs* which a$e incu$$eunifo$mly th$oughout the yea$* amount to P4=(*>>> 6manufactu$in

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costs of P2>>*>>> an' selling costs of P(=(*>>>7. The$e we$e noeginning o$ en'ing in+ento$ies.

If lao$ costs a$e 2>L of +a$iale costs an' (>L of fi)e' costs* a1>L inc$ease in wages an' sala$ies woul' inc$ease the nume$ ofunits $e pe$ $unning foot.The 'epa$tment has een ope$ating at a loss fo$ the past yea$ asshown elow.

Sales fo$ the yea$ P1*4(>*>>>8ess: e)penses 1*44(*>>>Jet loss fo$ the 'epa$tment P 2(*>>>

The following info$mation is a+ailale.

Ten thousan' ,foot pieces of metal yiel'e' >*>>> la$ge 'iscs* eachweighing ounces an' selling fo$ P(=* an' >*>>> small 'iscs* eachweighing (. ounces an' selling fo$ P1.

The co$po$ation has een p$o'ucing at less than Gno$mal capacity an'has ha' no spoilage in the cutting step of the p$ocess. The s/eletons$emaining afte$ the $ings ha+e een cut a$e sol' fo$ sc$ap at P.>> pe$poun'.

The +a$iale con+e$sion cost of each la$ge 'isc is >L of the 'iscAs

'i$ect mate$ial cost* an' +a$iale con+e$sion cost of each small 'isc is42L of the 'iscAs 'i$ect mate$ial cost. Va$iale con+e$sion costs a$ethe sum of 'i$ect lao$ an' +a$iale o+e$hea'.9i)e' costs we$e P3>*>>>.

4=. The net cost pe$ ounce of mate$ial is". P(.>> C. P1.4>%. P1.3> #. P1.> %oa'il

>. The total +a$iale costs pe$ unit fo$ the la$ge an' small 'isc$especti+ely* a$e". P1>.(> an' P.3>. C. P =.1> an' P2.->.%. P1.> an' P.>. #. P11.> an' P3.3>. %oa'il

1. If the mate$ial costs fo$ la$ge an' small 'iscs a$e P.2> an' P2.1$especti+ely* an' the no$mal p$o'uction capacity is 1>>*>>>,unle+el* what is the $ea/e+en point!". =1*311. C. 4=*13.%. 4*(13. #. (*1(. %oa'il

Questions ( th$ough 3 a$e ase' on the Statement of Income o#a+ao* Inc. which $ep$esents the ope$ating $esults fo$ the cu$$ent fiscayea$ en'ing #eceme$ -1. #a+ao ha' sales of 1*>> tons of p$o'u'u$ing the cu$$ent yea$. The manufactu$ing capacity of #a+aofacilities is -*>>> tons of p$o'uct. Consi'e$ each >*>>>Va$iale costs;anufactu$ing P-12*>>>Selling costs 1>*>>>

Total +a$iale costs P=2*>>>Cont$iution ma$gin P>2*>>>9i)e' costs;anufactu$ing P =>*>>>Selling 11(*2>>"'minist$ation 2*>>>

Total fi)e' costs P(4*2>>Jet income efo$e income ta)es P124*2>>

Income ta)es 6>L7 63-*>>>7Jet income afte$ income ta)es P =*2>>

(. The $ea/e+en +olume in tons of p$o'uct fo$ the yea$ is

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". (> C. 1*1>>%. =2 #. 22> %oa'illa

-. If the sales +olume is estimate' to e (*1>> tons in the ne)t yea$*an' if the p$ices an' costs stay at the same le+els an' amountsne)t yea$* the afte$,ta) income that #a+ao can e)pect fo$ ne)t yea$is". P1-2*>>> C. P11>*(2>%. P(-*2>> #. P1*2>> %oa'illa

. #a+ao has a potential fo$eign custome$ that has offe$e' to uy1*2>> tons at P2> pe$ ton. "ssume that all of #a+aoAs costs woul'e at the same le+els an' $ates as last yea$. 5hat net income afte$ta)es woul' #a+ao ma/e if it too/ this o$'e$ an' $e0ecte' someusiness f$om $egula$ custome$s so as not to e)cee' capacity!

". P(=4*2>> C. P(11*2>>%. P(2(*>>> #. P(23*2>> %oa'illa

2. 5ithout p$e0u'ice to you$ answe$s to p$e+ious > annually woul' nee' to e un'e$ta/en fo$ the ne)ttwo o$ th$ee yea$s. In a''ition* a P(2 pe$ ton sales commissiono+e$ an' ao+e the cu$$ent commission to the sales fo$ce in thenew te$$ito$y woul' e $e> ne)t yea$!". P1*1>*>>> C. P1*2>>*>>>%. P (2*>>> #. P1*-2>*>>> %oa'illa

Question Jos. 4 th$ough =1 a$e ase' on the following:"nilao S/i Company $ecently e)pan'e' its manufactu$ing capacity tallow it to p$o'uct up to 12*>>> pai$s of c$oss,count$y s/is of eithe$ thmountainee$ing mo'el o$ the tou$ing mo'el. The sales 'epa$tmeassu$es management that it can sell etween =*>>> an' 1-*>>> pai6units7 of eithe$ p$o'uct this yea$. %ecause the mo'els a$e +e$simila$* "nilao S/i will p$o'uce only one of the two mo'els. Thfollowing 'ata we$e compile' y the accounting 'epa$tment.

;ountainee$ing Tou$ingSelling p$ice pe$

unitP.>> >.>>

Va$iale cost pe$unit

2(.> (.>

9i)e' costs will total P-3=*3>> if the mountainee$ing mo'el p$o'uce' ut will e only P-13*>> if the tou$ing mo'el is p$o'uce'

"nilao S/i Company is su0ect to a >L income ta) $ate.

4. If "nilao S/i Company 'esi$es an afte$,ta) net income of P(*>>how many pai$s of tou$ing mo'el s/is will the company ha+e to sel". 1-*11 C. 1-*2-%. 1(*2(= #. *3> %oa'il

. The total sales $e+enue at which "nilao S/i Company woul' ma/the same p$ofit o$ loss $ega$'less of the s/i mo'el it 'eci'e' tp$o'uce is". P>*>>> C. P=(*>>>%. P((*>> #. P33*>> %oa'il

=. How much woul' the +a$iale cost pe$ unit of the tou$ing mo'ha+e to change efo$e it ha' the same $ea/e+en point in units athe mountainee$ing mo'el!". P(.3Dunit inc$ease C. P2.>-Dunit 'ec$ease%. P.2-Dunit inc$ease #. P(.=4Dunit 'ec$ease %oa'il

=>

. If the +a$iale cost pe$ unit of tou$ing s/is 'ec$eases y 1>L* anthe total fi)e' cost of tou$ing s/is inc$eases y 1>L* the ne$ea/e+en point will e". 1>*4-> pai$s

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%. 1-*>>4 pai$sC. 1(*1( pai$s %oa'illa#. ?nchange' f$om 11*3 pai$s ecause the cost changes a$e

e>>*>>>

;anufactu$ing costs:Va$iale P4*(>>*>>>9i)e' o+e$hea' (*->*>>> =*2>*>>>B$oss ma$gin 3*3>*>>>Selling an' a'minist$ati+ecosts:

Commissions to agents (*>>*>>>9i)e' ma$/eting costs 1(>*>>>9i)e' a'minist$ati+e costs 1*>>*>>> *-(>*>>>Jet ope$ating income (*1>*>>>

8ess fi)e' inte$est cost 2>*>>>Income efo$e incometa)es

1*3>>*>>>

8ess income ta) 6->L7 >*>>>

Jet income P1*1(>*>>>

P$ima$ily 'ep$eciation on sto$age facilities

"s ;aui han'e' the statement to im Vice$oy* PullmanAs p$esi'ent* shcommente'* GI went ahea' an' use' the agentsA 12L commission $atin completing these statements* ut weA+e 0ust lea$ne' that the$efuse to han'le ou$ p$o'ucts ne)t yea$ unless we inc$ease thcommission $ate to (>L.

GThatAs the last st$aw* im $eplie' ang$ily. GThose agents ha+e ee'eman'ing mo$e an' mo$e* an' this time theyA+e gone too fa$. Ho

can they possily 'efen' a (>L commission $ate!

GThey claim that afte$ paying fo$ a'+e$tising* t$a+el* an' the othecosts of p$omotion* the$eAs nothing left o+e$ fo$ p$ofit* $eplie' ;aui.

GI say itAs 0ust plain $oe$y* $eto$te' im. G"n' I also say itAs time w'umpe' those guys an' got ou$ own sales fo$ce. Can you get youpeople to wo$/ up some cost figu$es fo$ us to loo/ at!

G5eA+e al$ea'y wo$/e' them up* sai' ;aui. GSe+e$al companies w/now aout pay a 4.2L commission to thei$ own salespeople* alonwith a small sala$y. Of cou$se* we woul' ha+e to han'le all p$omotiocosts* too. 5e figu$e ou$ fi)e' costs woul' inc$ease y P(*>>*>>> pyea$* ut that woul' e mo$e than offset y the P-*(>>*>>> 6(>L P13*>>>*>>>7 that we woul' a+oi' on agentsA commissions.

The $ea/'own of the P(*>>*>>> cost figu$e follows:Sala$ies:Sales manage$ P 1>>*>>>

Salespe$sons 3>>*>>>T$a+el an' ente$tainment >>*>>>"'+e$tising 1*->>*>>>

Total P(*>>*>>>

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GSupe$* $eplie' im. G"n' I note that the P(*>>*>>> is 0ust whatweA$e paying the agents un'e$ the ol' 12L commission $ate.

GItAs e+en ette$ than that* e)plaine' ;aui. G5e can actually sa+eP42*>>> a yea$ ecause thatAs what weA$e ha+ing to pay the au'itingfi$m now to chec/ out the agentsA $epo$ts. So ou$ o+e$alla'minist$ati+e costs woul' e less.

GPull all of these nume$ togethe$ an' weAll show them to thee)ecuti+e committee tomo$$ow* sai' im. G5ith the app$o+al of thecommittee* we can mo+e on the matte$ imme'iately.

=(. 5hat is the $ea/e+en point in pesos fo$ ne)t yea$ assuming thatthe agentsA commission $ate $emains unchange' at 12L!

". P1>*32>*>>> C. P =*>>>*>>>%. P1(*>>>*>>> #. P1>*42>*>>> %oa'illa

=-. 5hat is the $ea/e+en point in pesos fo$ ne)t yea$ assuming thatthe agentsA commission $ate is inc$ease' to (>L!". P1-*141*>>> C. P1-*41*(3%. P12*>>>*>>> #. P1(*42>*>>> %oa'illa

=. 5hat is the $ea/e+en point in pesos fo$ ne)t if the companyemploys its own sales fo$ce!". P12*>>>*>>> C. P1-*>=>*=>=%. P1(*=2*22 #. P12*124*=2 %oa'illa

=2. "ssume that Pullman Company 'eci'es to continue selling th$oughagents an' pays the (>L commission $ate. The +olume of salesthat woul' e $ecommission $ate o$ employs its own sales fo$ce:". P11*3(2*>>> C. P1=*(>>*>>>%. P1(*>>>*>>> #. P1*3>>*>>> %oa'il

Question Jos. =4 th$ough 1>( a$e ase' on the following info$mation:San Ca$los ope$ates a gene$al hospital ut $ents space an' e's tsepa$ate entities fo$ speciali&e' t$eatment such as pe'iat$icmate$nity* psychiat$ic* etc. San Ca$los cha$ges each sepa$ate entifo$ common se$+ices to its patients li/e meals an' laun'$y an' fo$ aa'minist$ati+e se$+ices such as illings* collections* etc. "uncollectile accounts a$e cha$ge' 'i$ectly to the entity. Space ane' $entals a$e fi)e' fo$ the yea$.

9o$ the enti$e yea$ en'e' Fune ->* the Pe'iat$ics #epa$tment at SaCa$los Hospital cha$ge' each patient an a+e$age of P32> pe$ 'ay* haa capacity of 3> e's* ope$ate' ( hou$s pe$ 'ay fo$ -32 'ays* anha' $e+enue of P1>*343*(2>.

E)penses cha$ge' y the hospital to the Pe'iat$ics #epa$tment fo$ thyea$ en'e' Fune -> we$e:

%asis of "llocation

Patient#ays

%e'Capacity

#ieta$y P -(*2>>Fanito$ial P

11*>>8aun'$y 1=4*1>>8a* othe$ than 'i$ect cha$ges topatients1>*3(2Pha$macy 1>*3(2Repai$s an' maintenance 32*4>> 33*>2

Bene$al a'minist$ati+e se$+ices 1*(1*4>Rent (*23*41>%illings an' collections 3=*2>%a' 'et e)pense (3*-42

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Othe$s 11*=42 (>*-12

Total P(*3-*42>

P*1=>*(2>

The only pe$sonnel 'i$ectly employe' y the Pe'iat$ics #epa$tment a$esupe$+ising nu$ses* nu$ses* an' ai'es. The hospital has minimumpe$sonnel $e*>>> 1*>>> (1 11 1*>>1 14*>>> (( 1( 14*>>1 (-*4(2 (( 1- (-*4(3 (2*22> (2 1 2(2*221 (4*-42 (3 1 2(4*-43 (=*(>> (= 13 3

The staffing le+els ao+e $ep$esent full,time e>*>>>* $especti+ely.

The Pe'iat$ics #epa$tment ope$ate' at 1>>L capacity 'u$ing 111 'aysof the past yea$. It is estimate' that 'u$ing => of these capacity 'ays*the 'eman' a+e$age 14 patients mo$e than capacity an' e+en went ashigh as (> patients mo$e on some 'ays. The hospital has an a''itional(> e's a+ailale fo$ $ent fo$ the coming fiscal yea$.

=4. The cont$iution ma$gin pe$ patient 'ay is". P>>.>> C. P2>>.>>%. P2>.>> #. P2(2.>> %oa'illa

=. How many patient 'ays a$e necessa$y to co+e$ fi)e' costs fo$ e'capacity an' fo$ supe$+iso$y nu$ses!". =*2>> C. 1>*(2>

%. =*(> #. 1(*>>> %oa'il

==. The nume$ of patient 'ays nee'e' to co+e$ total costs is". 1*4> C. 12*(>%. 12*1> #. 13*>> %oa'il

1>>. If the Pe'iat$ics #epa$tment $ente' an a''itional (> e's an' aothe$ facto$s $emain the same as in the past yea$* what woul' the inc$ease in $e+enue!". P ==*2>> C. P1*>2*2>>%. P 44*2>> #. P =4*2>> %oa'il

1>1.Continuing to consi'e$ the (> a''itional $ente' e's* the inc$ease total +a$iale cost applie' pe$ patient 'ay is". P((=*-2> C. P((=*32>

%. P((=*2>> #. P(-=*-2> %oa'il

1>(.5hat is the inc$ease in fi)e' cost applie' fo$ e' capacity* gi+en thinc$ease in nume$ of e's!". P1*-=3*334 C. P1*4>*>>>%. P1*14*(- #. P1*2(>*>>> %oa'il

Question Jos. 1>- 1>2 a$e ase' on the following:;s. Sha$/ey sta$te' a pi&&a $estau$ant in (>>-. 9o$ this pu$pose uil'ing was $ente' fo$ P>*>>> pe$ month. Two women we$e hi$e' two$/ full time at the $estau$ant an' si) college stu'ents we$e hi$e' two$/ -> hou$s pe$ wee/ 'eli+e$ing pi&&a. This le+el of employment haeen consistent. "n outsi'e accountant was hi$e' fo$ ta) anoo//eeping pu$poses* fo$ which ;s. Sha$/ey pays P->*>>> pe$ month

The necessa$y $estau$ant e>- an' (>>3. P$ofits ha+e mo$e than 'oulesince (>>-. ;s. Sha$/ey 'oes not un'e$stan' why p$ofits ha+

inc$ease' faste$ than +olume.

" p$o0ecte' income statement fo$ the yea$ en'e' #eceme$ -1* (>>4p$epa$e' y the accountant* is shown elow:

121


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Sales P=*2>>*>>>Cost of foo' sol' P(*2>*>>>5ages f$inge enefits:Restau$ant help 12*>>>#eli+e$y help 1*4->*>>>Rent >*>>>"ccounting se$+ices -3>*>>>#ep$eciation:#eli+e$y e>*>>>Restau$ant e>*>>>?tilities (-(*2>>Supplies 1(>*>>> 4*-4*2>>Jet income efo$e ta)es P(*11(*2>>Income ta)es 6>L7 2*>>>

Jet income P1*(34*2>>

Jote: The a+e$age pi&&a sells fo$ P(2>.

1>-.5hat is the ta) shiel' on the noncash fi)e' costs!". P-(>*>>> C. P1=*2>>%. P->*>>> #. P2>*>>> %oa'illa

1>.5hat is the $ea/e+en point in nume$ of pi&&as that must e sol'!". (2*=(= C. (-*23=%. 1*12> #. (*11 %oa'illa

1>2.5hat is the cash flow $ea/e+en point in nume$ of pi&&as that muste sol'!". 1=*2(= C. 1(*==>%. (1*( #. 1>*44- %oa'illa

Question Jos. 1>3 th$ough 1>= a$e ase' on the following info$mation:Time) Spo$ting Boo's Company* a wholesale supply company*engages in'epen'ent sales agents to ma$/et the companyAs p$o'uctsth$oughout the count$y. These agents cu$$ently $ecei+e a commission

of (> pe$cent of sales* ut they a$e 'eman'ing an inc$ease to (2pe$cent of sales ma'e 'u$ing the yea$ en'ing #eceme$ -1* (>>4.The cont$olle$ al$ea'y p$epa$e' the (>>4 u'get efo$e lea$ning of theagentsA 'eman' fo$ an inc$ease in commission. The u'gete' (>>4

income statement is shown elow. "ssume that cost of goo's sol' 1>> pe$cent +a$iale cost.

Sales P1>*>>>*>>>Cost of goo's sol' 3*>>>*>>>B$oss ma$gin P *>>>*>>>Selling an' a'minist$ati+eCommissions P(*>>>*>>>Othe$ e)penses 6fi)e'7 1>>*>>> (*1>>*>>>Income efo$e ta)es P 1*=>>*>>>Income ta) 6->L7 24>*>>>

Jet income P 1*-->*>>>

Time)As management is consi'e$ing the possiility of employing futime sales pe$sonnel. Th$ee in'i+i'uals woul' e $e*>>> each* plus commissions of pe$cent of sales. In a''ition* a sales manage$ woul' e employe' at

fi)e' annual sala$y of P13>*>>>. "ll othe$ fi)e' costs* as well as th+a$iale cost pe$centages* woul' $emain the same as the estimates the (>>4 u'gete' income statement.

1>3.How much is the estimate' $ea/,e+en point in peso sales fo$ thyea$ en'ing #eceme$ -1* (>>4* ase' on the u'gete' incomstatement p$epa$e' y the cont$olle$!". P2>>*>>> C. P(2>*>>>%. P>>*>>> #. P1(2*>>> %oa'il

1>4.How much is the estimate' $ea/,e+en point in peso sales fo$ thyea$ en'ing #eceme$ -1* (>>4* if the company employs its owsales pe$sonnel!". P 2(*24 C. P 42*>>>%. P 4(*24 #. P1*>>>*>>> %oa'il

1>.How much +olume in peso sales woul' e $e>4* to yiel' the same net income ap$o0ecte' in the u'gete' income statement* if Time) continues t

use the in'epen'ent sales agents an' ag$ees to thei$ 'eman' fo$ (2 pe$cent sales commission!". P *>>>*>>> C. P1>*>>>*>>>%. P =*2--*--- #. P1-*---*--- %oa'il

122


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1>=.How much is the estimate' +olume in peso sales that woul'gene$ate an i'entical net income fo$ the yea$ en'ing #eceme$ -1*(>>4* $ega$'less of whethe$ Time) employs its own sales pe$sonnelo$ continues to use the in'epen'ent sales agents an' pays them a(2 pe$cent commission!". P1*>>>*>>> C. P1*2>>*>>>%. P1*(2>*>>> #. P1*>>*>>> %oa'illa

Question Jos. 11> th$ough 11- a$e ase' on the following 'ata:Step Company p$o'uces toys an' othe$ items fo$ use in each an'$eso$t a$eas. " small* inflatale toy has come onto the ma$/et that thecompany is an)ious to p$o'uce an' sell. Enough capacity e)ists in thecompanyAs plant to p$o'uce 13*>>> units of the toy each month.Va$iale costs to manufactu$e an' sell one unit woul' e P1(.2>* an'

fi)e' costs associate' with the toy woul' total P-2>*>>> pe$ month.

The companyAs ;a$/eting #epa$tment p$e'icts that 'eman' fo$ thenew toy will e)cee' the 13*>>> units that the company is ale top$o'uce. "''itional manufactu$ing space can e $ente' f$om anothe$company at a fi)e' cost of P1>*>>> pe$ month. Va$iale costs in the$ente' facility woul' total P1 pe$ unit* 'ue to somewhat less efficientope$ations than in the main plant. The new toy will sell fo$ P-> pe$unit.

11>.The $ea/e+en units fo$ the new toy woul' e:". (>*>>> C. (1*>>>%. 1*>>> #. ((*2>> %oa'illa

111.How many units shoul' the company nee' to sell in o$'e$ to ea$n aefo$e,ta) p$ofit of P12>*>>>!". =*1- C. -1*42%. ->*-42 #. -2*>>> %oa'illa

11(

.If the sales manage$ $ecei+es a onus of P1.>> fo$ each unit sol' ine)cess of the $ea/,e+en point* how many units must e sol' eachmonth to ea$n a $etu$n of (2L on the monthly in+estment in fi)e'costs!

". (-*- C. (=*--%. (4*>>> #. ->*>>> %oa'il

11-."ssuming that Step Company will 0ust $ent a manufactu$ing spacfo$ a month in o$'e$ to p$o'uce special o$'e$ fo$ *>>> toys. 5hais the acceptale minimum selling p$ice to Step Company fo$ thspecial sale!". P1.>> C. P((.>>%. P12.(2 #. P(.>> %oa'il

Question Jos. 11 th$ough 11 a$e ase' on the following:%olton CompanyAs income statement fo$ last month is gi+en elow:

Sales 612*>>> units P->7 P2>*>>>8ess +a$iale e)penses -12*>>>Cont$iution ma$gin 1-2*>>>

8ess fi)e' e)penses =>*>>>Jet income P 2*>>>

The in'ust$y in which %olton Company ope$ates is >> C. P3>*>>>%. P->*>>> #. P42*>>> %oa'il

112.How many units a$e $e


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113.The 'eg$ee of ope$ating le+e$age 'u$ing the month whe$e the neweL eachmonth an' net income woul' inc$ease y one,thi$'. 9i)e' costscoul' e slashe' to only P*>>> pe$ month. Compute the$ea/,e+en point fo$ the company afte$ the change in ma$/etingmetho'.". *>>> units C. =*>>> units%. 1(*2>> units #. 1>*>>> units %oa'illa

11."ssuming that 'u$ing the month following the month newe> units. The +a$iale e)penses pe$ unit an' the monthly fi)e'costs as affecte' y the ac>*>>> C. P 2>>*>>>%. P63>>*>>>7 #. P62>>*>>>7 %oa'il

1(1.The company is consi'e$ing paying the sto$e manage$ of #a+asales outlet an incenti+e commission of P42 pe$ pai$ of shoes 6ia''ition to the salespe$sonAs commission7. If this change is ma'what will e the new $ea/e+en in pai$s of shoes!". (3*334 C. (>*>>>%. 13*>>> #. ((*>>> %oa'il

1((.Instea' of paying the manage$ a st$aight P42 pe$ pai$ of shoecommission on all pai$s of shoes sol'* the company is consi'e$inpaying the sto$e manage$ P2> commission on each pai$ of shoesol' in e)cess of the $ea/e+en point. If this change is ma'e* whwill e the sales outletAs net income o$ loss if (2*>>> pai$s of shoea$e sol'!". P (2>*>>> C. P1*2>>*>>>%. P =>>*>>> #. P1*(2>*>>> %oa'il

1(-.If the company woul' pay the manage$ P2> commission on eacpai$ of shoes sol' in e)cess of the $ea/e+en point* how many pai$of shoes a$e $e


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". (-*3>> C. (2*>>>%. (-*>>> #. (4*2>> %oa'illa

1(.The company is consi'e$ing eliminating sales commissions enti$elyin its sto$es an' inc$easing fi)e' sala$ies y P(*1(*>>> annually.

If this change is ma'e* what will e the nume$ of pai$s of shoes toe sol' y #a+ao outlet to e in'iffe$ent to commission asis!". (2*->> C. (1*>>>%. 12*->> #. 1*2>2 %oa'illa

The following info$mation shoul' e use' to answe$ Question Jos. 1(2th$ough 1-1.

#ue to e$$atic sales of its sole p$o'uct , a high,capacity atte$y fo$laptop compute$s* Salce'o Company has een e)pe$iencing 'ifficulty

fo$ some time. The companyAs income statement fo$ the most $ecentmonth is gi+en elow:

Sales 61=*2>> units P->>7 P2*2>*>>>8ess +a$iale e)penses *>=2*>>>Cont$iution ma$gin 1*422*>>>8ess fi)e' e)penses 1*>>*>>>Jet loss P 62*>>>7

1(2.The $ea/ e+en in peso sales fo$ Salce'o Company is:". P3*>>>*>>> C. P2*2(*423%. P(*241*(= #. P4*2>>*>>> %oa'illa

1(3.The p$esi'ent elie+es that a P13>*>>> inc$ease in the monthlya'+e$tising u'get* comine' with an intensifie' effo$t y the salesstaff* will $esult in an P>>*>>> inc$ease in monthly sales. If thep$esi'ent is $ight* what will e the effect on the companyAs monthlynet income o$ loss!". P1(>*>>> inc$ease C. P1(>*>>> 'ec$ease%. P >*>>> inc$ease #. P >*>>> 'ec$ease %oa'illa

1(4.Refe$ to the o$iginal 'ata. The sales manage$ is con+ince' that a1>L $e'uction in the selling p$ice* comine' with an inc$ease ofP3>>*>>> in the monthly a'+e$tising u'get* will cause unit sales to

'oule. 5hat will the new p$ofit o$ loss if these changes a$a'opte'!". P 3>*>>> C. P 2*>>>%. P63>*>>>7 #. P62*>>>7 %oa'il

1(.Refe$ to the o$iginal 'ata. The ;a$/eting #epa$tment thin/s that fancy new pac/age fo$ the laptop compute$ atte$y woul' hesales. The new pac/age woul' inc$ease pac/aging costs y P4.2pe$ unit. "ssuming no othe$ changes* how many units woul' ha+to e sol' each month to ea$n a p$ofit of P=4*2>>!". (1*1 C. (2*2>%. (-*>>> #. (*>>> %oa'il

1(=.Refe$ to the o$iginal 'ata. %y automating ce$tain ope$ations* thcompany coul' $e'uce +a$iale costs y P- pe$ unit. Howe+e$* fi)e

costs woul' inc$ease y P4(*>>> each month.

How woul' the $ea/e+en point in units change if the companautomate' the ope$ations!

". 1*>>> units inc$ease C. -*>>> units inc$ease%. 1*>>> units 'ec$ease #. -*>>> units 'ec$ease %oa'il

1->."t what le+el of p$o'uction woul' the automation of the p$o'uctiop$ocess e in'iffe$ent to the p$esent p$ocess!". 1*>>> C. (*>>>%. (1*>>> #. (*>>> %oa'il

1-1.5hich of the two metho's 6the p$esent o$ the automate'7 hahighe$ income at the le+el of sales of (3*>>> units!". ;anual* P3>*>>> C. ;anual* P(>*>>>%. "utomate'* P3>*>>> #. "utomate'* P(>*>>

%oa'illa

Question Jos. 1-( 1- a$e ase' on the following:

"lmo Company manufactu$es an' sells a'0ustale canopies that attacto moto$ homes an' t$aile$s. The ma$/et co+e$s new unit pu$chases awell as $eplacement canopies. "lmo 'e+elope' its (>>4 usiness plaase' on the assumption that canopies woul' sell at a p$ice of P>

125


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1 . "nswe$: %Cont$iution ;a$gin 9i)e' costs

P12*>>>

6Cont$iution ;a$ginD?nit Sales7 Va$iale cost pe$ unit #esi$e' ;inimum Sales P$ice

6P12*>>> U -*>>>7 6P4*2>> U -*>>>7 4.2>

2 . "nswe$: C?nit cont$iution ma$gin 6P2> , P->7 P (>.>>"''itional p$ofit 62>> ) P(>7 P1>*>>>

"fte$ the $ea/,e+en le+el* the amount of p$ofit e.>>9i)e' costs

612*>>> 4*>>> *>>> 1>*>>>7D(2> -(>.>>Cost to e cha$ge' P(>.>>

4 . "nswe$: %The nume$ of units $e>> ) >.-7 P3 1*3>>

"lte$nati+e solution:Jew $ea/e+en units 6P-(*>>> ) 1.-7 U P3 3*=--8ess cu$$ent $ea/e+en units 2*---Inc$ease in $ea/e+en units 1*3>>


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7 . "nswe$: "The amount of cont$iution ma$gin pe$ unit is constant within a $ele+ant $ange. Theamount of p$ofit is inc$ease' y the amount of unit cont$iution ma$gin.

Cont$iution ma$gin pe$ unit:fi)e' cost U $ea/e+en unit sales 2>*>>> U 2*>>> P1>.>>

"t $ea/e+en point* the p$ofit is &e$o. The$efo$e* the p$ofit at a le+el of 2*>>1 unitswill e P1> which is the amount of cont$iution p$o+i'e' y the unit 6one unit7 ine)cess of $ea/e+en point.

8 "nswe$: "C;R 9i)e' costDSales

1>>*>>>D>>*>>> 1(.2>L

P$ofit 61*(>>*>>> >>*>>>7>.1(2 P2>*>>>

The amount of sales that p$o+i'es p$ofit shoul' e the sales $e+enues ao+e the $ea/e+en sales.

"lte$nati+e solution:Total cont$iution ma$gin 1*(>>*>>> ) >.1(2 P12>*>>>9i)e' costs 1>>*>>>P$ofit P 2>*>>>

9 . "nswe$: "Cu$$ent unit cont$iution ma$gin 6P-( P(7 PCu$$ent $ea/,e+en units 6P>>*>>> U P7 2>*>>>Jew unit cont$iution ma$gin 6P> , P(7 P13Jew $ea/,e+en units 6>>*>>> U 137 (2*>>>Jet 'ec$ease in $ea/e+en units

62>*>>> (2*>>>7 (2*>>>

10 . "nswe$: "C; pe$ unit: ((>*>>> D 61>>*>>> >*>>>7 11.>>9i)e' costs: >*>>> ) 11 P>*>>>

The cont$iution ma$gin pe$ unit is linea$ o$ constant pe$ unit.

The$efo$e: TC; ?nits ?C;

11 . "nswe$: %

TC; Sales C;R

Change in TC;: 63>>*>>>>.(7 6-3>*>>>>.17 *>>>C;R: Inc$ease in TC; U Inc$ease in Sales*>>> U (>*>>> -2L

%$ea/e+en sales =>*->> U >.-2 (2*>>>

12 . "nswe$: C%efo$e,ta) p$ofit (*>>> U >.3 >*>>>"'' fi)e' cost (>>*>>>

Total cont$iution ma$gin (>*>>>


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Selling p$ice ?VC ?C;Selling P$ice 3 6(>*>>> U >*>>>7 1(.>>

13 . "nswe$: CThe company@s 'eg$ee of ope$ating le+e$age is 'ete$mine' as follows:#eg$ee of ope$ating le+e$age Cont$iution ma$gin U Jet income

#eg$ee of ope$ating le+e$age P3>>*>>> U P(>*>>> (.2>

14 . "nswe$: "Inc$ease in sales 1(2*>>>8ess +a$iale costs an' e)penses

>.=> ) 1(2*>>> 11(*2>>"''itional p$ofit efo$e ta) 1(*2>>

8ess a''itional ta) >.> ) 1(*2>> 2*>>>"''itional p$ofit 4*2>>

15 . "nswe$: %"''itional p$ofit U ?C; a''itional unit sales

6>*>>> *>>>7 U 6>,3>7 (*>> units

16 . "nswe$: "Total peso sales $e>*>>>

Peso sales $e*>>> ) 62,-.2>7 42*>>>8ess: a''itional p$ofit 6(2>*>>> ) >.1>7 (2*>>>"''itional fi)e' costs 2>*>>>

Selling p$ice P-.2> U >.4> P2.>>

18 . "nswe$: C" sho$te$ calculation of fin'ing the amount of sales is to 'i+i'e $ea/e+en sales y 61

;SR7

Sales P3>>*>>> 61 >.(7 P42>*>>>

"n alte$nati+e solution to fin' sales is to compute the p$ofit ma$gin.

P$ofit ma$gin Cont$iution ma$gin $atio ) ma$gin of safety $atio.P$ofit ma$gin (>L ) >L LSales P$ofit U P$ofit ma$gin


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35/52

25 . "nswe$: "Re+ise' cont$iution ma$gin (>*>>> ) 1.12 ) 64,171-*>>>9i)e' cost 61>2*>>> 1=*(>>7 1(*(>>Re+ise' p$ofit 1-*>>P$io$ p$ofit -2*>>>#ec$ease in p$ofit (1*(>>

26 . "nswe$: ";a$gin of Safety %u'gete' sales %$ea/e+en sales;a$gin of Safety: P>>*>>> P>*>>> P-3>*>>>

27 . "nswe$: %#O8 at P=>*>>> sales:

Sales =>*>>>Va$iale costs 2>*>>>

Total Cont$iution ma$gin >*>>>9i)e' costs ->*>>>P$ofit 1>*>>>

#O8 TC;DOP >*>>>D1>*>>> times

L inc$ease in sales ) #O8 L inc$ease in p$ofit ) (>L >L

28 . "nswe$: %(>>3 #O8 (42*>>>D42*>>> -.34Pe$centage Inc$ease in p$ofit* (>>4 -.34 ) ->L 11>L(>>4 P$ofit 42*>>> 642*>>> ) 1.1>7 P124*2>>

29 . "nswe$: "Peso sales 1(*>>>D6>.> >.17 P>*>>>?nit sales P>*>>>D1> *>>>Inc$ease' units *>>> ) 1.(2 2*>>>Re+ise' cont$iution ma$gin 2*>>> ) 6= 37 P12*>>>8ess fi)e' cost 1(*>>>Re+ise' p$ofit P -*>>>

30 . "nswe$: %P$o0ecte' cost of sales:

P>>*>>> 6P-*>>>*>>> ) >.327 P(*42>*>>>

31 . "nswe$: %?nit C; Change in P$ofit U Change in Sales (>>*>>> U 61>>*>>> 42*>>>7

9i)e' costs %$ea/e+en units ) ?C; 42*>>> ) 3>>*>>>

32 . "nswe$: %


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?nit cost:;ate$ials 6P-3*>>> U (*>>>7 P1.2>8ao$ 6P2*>>> U (*>>>7 (.(2Va$iale selling e)pense >.-2Va$iale unit cost P.1>Re

33 . "nswe$: #Composite $atio:

N: 3>*>>> U 64(>*>>> 3>*>>>7 4.>2=LK: 4(>*>>> U 64(>*>>> 3>*>>>7 2(.=1L

5eighte',"+e$age Cont$iution ;a$gin:6.2(=1 X .3>7 6.4>2= X .>7 >.2>2(

%$ea/e+en sales in pesos:62>2*1 U >.2>2(7 P1*>>>*>>>

KAs peso sales at $ea/e+en P1; ) >.4>2= P 4>*2=>

34 . "nswe$: "Sales 62>>*>>> ) 1.1>7 22>*>>>Va$iale cost ->>*>>>Cont$iution ma$gin (2>*>>>

C;R (2> U 22> 2.2LO$iginal fi)e' costs:2>>*>>> ->>*>>> 12>*>>> 2>*>>>Jew fi)e' cost 2>*>>> ) >.> >*>>>%$ea/e+en sales >*>>>D>.22 P*>>>

35 . "nswe$: %%efo$e,ta) p$ofit 6(*>>> U >.37 P >*>>>"'' fi)e' costs (>>*>>>

Total cont$iution ma$gin P(>*>>>

Cont$iution ma$gin pe$ unit 6P(>*>>> U >*>>>7 P 3.>>Va$iale cost pe$ unit 3.>>Selling p$ice P1(.>>

36 . "nswe$: "#O8 C;DOP (42*>>>D42*>>> -.34 times

37 . "nswe$: CPeso sales : 9C U 6C;R , P$ofit ;a$gin7 P(1>*>>> U 6>.22 , >.127 P2(2*>>>

C;R 1>>L , 2L 22L


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38 . "nswe$: %C;R: Change in 9i)e' Costs U Change in %$ea/e+en Sales4*42> U 6=42*>>> 42>*>>>7>.-2

9i)e' costs efo$e an inc$ease of 4*42>:

42>*>>> ) >.-2 (3(*2>>

The inc$ease in fi)e' costs of P4*42> e>> U .37 1(2*>>>Re. ) 1.2>7 6>.3 ) (7 1.>Re+ise' %$ea/e+en units 1(*3>>D1.42 4*(>>O$iginal %$ea/e+en units 1(*3>>D1.> 4*>>>Inc$ease in $ea/e+en units (>>

43 . "nswe$: C5"C; 6-> ) >.37 63> ) >.7 P(

%$ea/e+en units: 3->*>>>D( 12*>>>

%$ea/'own:P$o'uct Stan'a$' 12*>>> ) >.3 =*>>>P$o'uct #elu)e 12*>>> ) >. 3*>>>

44 . "nswe$: %5"C; 6D4 ) >.>76-D4 ) >.=- P>.3(24%E units 4*3>>D>.3(24 1(*>=1%aules 1(*>=1 ) D4 3*=>=


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