Due to erratic sales of its sole product, a high capacity battery for laptop computers, Salcedo Company has been experiencing difficulty for some time. The company's income statement for the most recent month is given below: Sales (19,500 units @ P500) P9,750,000 Less variable expenses (7,995,000) Contribution margin 1,755,000 Less fixed expenses 1,800,000 Net loss P (45,000)   By automating certain operations, the company could reduce variable costs by P30 per unit. However, fixed costs would increase by P9600,000 each month. How would the breakeven point in units change if the company automated the operations?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Due to erratic sales of its sole product, a high capacity battery for laptop computers, Salcedo Company has been experiencing difficulty for some time. The company's income statement for the most recent month is given below:

Sales (19,500 units @ P500) P9,750,000

Less variable expenses (7,995,000)

Contribution margin 1,755,000

Less fixed expenses 1,800,000

Net loss P (45,000)

 

By automating certain operations, the company could reduce variable costs by P30 per unit. However, fixed costs would increase by P9600,000 each month. How would the breakeven point in units change if the company automated the operations?

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