2. A company is uncertain how many units of a new product can be sold each year. To determine its sensitivity to varying annual sales volumes, cost estimates for manufacturing the product were found to be as follows: Direct materials P3.75 per unit Direct labor =P11.50 per unit Overhead = P25,620+P3.25 per unit In addition, new equipment costing P165,000 will be needed. It is expected that it would be used for 10 years with a salvage value of P25,000 at the end of that time. A market study indicates that the product will sell P28.00 per unit. If money is worth 12% to the company before taxes, determine the rate of return for annual sales volume of a.) 4,500 units b.) 5,700 units c.) 8,200 units. d.) 9,600 units

2. A company is uncertain how many units of a new product can be sold each year. To determine its sensitivity to varying annual sales volumes, cost estimates for manufacturing the product were found to be as follows: Direct materials P3.75 per unit Direct labor =P11.50 per unit Overhead = P25,620+P3.25 per unit In addition, new equipment costing P165,000 will be needed. It is expected that it would be used for 10 years with a salvage value of P25,000 at the end of that time. A market study indicates that the product will sell P28.00 per unit. If money is worth 12% to the company before taxes, determine the rate of return for annual sales volume of a.) 4,500 units b.) 5,700 units c.) 8,200 units. d.) 9,600 units

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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