Alpha Frontier Inc. introduced a product ten years ago. The product’s patent has now expired and Alpha expects a significant increase in suppliers for this product. Alpha originally sold the products at P 1,500 each but competitors will likely sell it at P1,450. Last year, Alpha had actual and budgeted cost per unit of P806.67 and P783.33 respectively. If Alpha wants to maintain the profit per unit earned last year, how much should the decrease in the budgeted cost per unit be for the coming year? Budgeted Last Year Actual Total Costs P 1,175,000 P 1,210,000 Units Sold 1,500.00 1,500.00 Cost per unit P 783.33 P 806.67
Alpha Frontier Inc. introduced a product ten years ago. The product’s patent has now expired and Alpha expects a significant increase in suppliers for this product. Alpha originally sold the products at P 1,500 each but competitors will likely sell it at P1,450. Last year, Alpha had actual and budgeted cost per unit of P806.67 and P783.33 respectively. If Alpha wants to maintain the profit per unit earned last year, how much should the decrease in the budgeted cost per unit be for the coming year? Budgeted Last Year Actual Total Costs P 1,175,000 P 1,210,000 Units Sold 1,500.00 1,500.00 Cost per unit P 783.33 P 806.67
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Alpha Frontier Inc. introduced a product ten years ago. The product’s patent has now expired and Alpha expects a significant increase in suppliers for this product. Alpha originally sold the products at P 1,500 each but competitors will likely sell it at P1,450. Last year, Alpha had actual and budgeted cost per unit of P806.67 and P783.33 respectively. If Alpha wants to maintain the profit per unit earned last year, how much should the decrease in the budgeted cost per unit be for the coming year?
|
|
Budgeted |
Last Year Actual |
|
Total Costs |
P 1,175,000 |
P 1,210,000 |
|
Units Sold |
1,500.00 |
1,500.00 |
|
Cost per unit |
P 783.33 |
P 806.67 |
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