3. Data for Pantok Corporation are shown below: Selling price......... Variable expenses... Contribution margin....... Per unit P75 45 P30 Percent of Sales 100% 60% 40% Fixed expenses are P75,000 per month and the company is selling 3,000 units per month. Required: a. The marketing manager believes that an P8,000 increase in the monthly advertising budget would increase monthly sales by P15,000. Should the advertising budget be increased? (show computations to prove your answer) b. Refer to the original data. Management is considering using higher-quality components that would increase the variable cost by P3 per unit. The marketing manager believes that the higher-quality product would increase sales by 15% per month. Should the higher-quality components be used? (show computations to prove your answer)

3. Data for Pantok Corporation are shown below: Selling price......... Variable expenses... Contribution margin....... Per unit P75 45 P30 Percent of Sales 100% 60% 40% Fixed expenses are P75,000 per month and the company is selling 3,000 units per month. Required: a. The marketing manager believes that an P8,000 increase in the monthly advertising budget would increase monthly sales by P15,000. Should the advertising budget be increased? (show computations to prove your answer) b. Refer to the original data. Management is considering using higher-quality components that would increase the variable cost by P3 per unit. The marketing manager believes that the higher-quality product would increase sales by 15% per month. Should the higher-quality components be used? (show computations to prove your answer)

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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