A company makes a single product that it sells for P16 per unit. Fixed costs are P76,800 per month and the product has a contribution margin ratio of 40%. If the company's actual sales are P240,000, its margin of safety is P

A company makes a single product that it sells for P16 per unit. Fixed costs are P76,800 per month and the product has a contribution margin ratio of 40%. If the company's actual sales are P240,000, its margin of safety is P

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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Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

A company makes a single product that it sells for P16 per unit. Fixed costs are P76,800 per month and the
product has a contribution margin ratio of 40%. If the company's actual sales are P240,000, its margin of
safety is P

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s
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