7. The Yellow Company has the capacity to manufacture 20,000 units per month. However, present plans call for monthly production and sales of 15,000 units at P21.00 each. Costs per unit are as follows: Direct materials P7.00 Direct labor 4.20 Variable factory overhead Fixed factory overhead Variable marketing expenses Fixed administrative expenses 1.05 2.10 0.35 1.40 P16.10 Total Assume that Yellow Company accepted a special order of 5,000 units at P15.00 per unit, the decrease or increase in contribution margin shall amount to a. P5,500 decrease b. P12,000 decrease c. P12,000 increase d. P13,750 increase e. None of these; answer is 8. Refer to no. 7. The unit cost figure the company would use in costing inventory using direct costing is a. P12.25 b. P12.60 c. P14.70 d. P16.10 e. None of these; answer is 9. Refer to no. 7. Assuming that the regular sales price of the company is reduced to P19.00 resulting in a 10% increase in sales volume, the effect in the monthly contribution margin will be a. P20,400 decrease b. P20,400 increase c. P30,000 increase d. P33,000 increase e. None of these; answer is

7. The Yellow Company has the capacity to manufacture 20,000 units per month. However, present plans call for monthly production and sales of 15,000 units at P21.00 each. Costs per unit are as follows: Direct materials P7.00 Direct labor 4.20 Variable factory overhead Fixed factory overhead Variable marketing expenses Fixed administrative expenses 1.05 2.10 0.35 1.40 P16.10 Total Assume that Yellow Company accepted a special order of 5,000 units at P15.00 per unit, the decrease or increase in contribution margin shall amount to a. P5,500 decrease b. P12,000 decrease c. P12,000 increase d. P13,750 increase e. None of these; answer is 8. Refer to no. 7. The unit cost figure the company would use in costing inventory using direct costing is a. P12.25 b. P12.60 c. P14.70 d. P16.10 e. None of these; answer is 9. Refer to no. 7. Assuming that the regular sales price of the company is reduced to P19.00 resulting in a 10% increase in sales volume, the effect in the monthly contribution margin will be a. P20,400 decrease b. P20,400 increase c. P30,000 increase d. P33,000 increase e. None of these; answer is

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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Stella Co. sells “BJS” at a unit price of P 36,000, with the following unit production costs: Direct materials P 12,000Direct labor 8,000Variable overhead 6,000Fixed overhead 4,000 A special order for 1,000 units was received from Marie, a well-known BJS distributor based in Makati. Additional shipping costs for this sale are P4,000 per unit. REQUIREMENTS: What is the minimum selling price per unit for the special order if: 1. Stella is operating at FULL capacity?2. Stella has EXCESS capacity?
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