For Items 1-3 A company is making plans for next year, using CVP analysis as its planning tool. Next year's sales data about its product are as follows: Selling Price Variable manufacturing cost per unit Variable selling and administrative expenses Fixed Operating Costs Income Tax Rate 60.00 22.50 4.50 148,500.00 30% 1. Assume that the company's management learned that a new technology that will increase the quality of its product is available. If implemented, its projections for next year will change: i. The selling price of the product will increase to P75 per unit. ii. Fixed manufacturing costs will increase by 20%. iii. Additional advertising costs will be incurred to promote the higher-quality product. This will increase fixed manufacturing costs by 10%. iv. The improved product cost will require a new material that will increase direct materials cost by P4.50 % reque the If the new technology adapted, how much sales should the company make to earn a profit of 10% on sales? a. P366,130 b. P358,875 c. P253,324 d. P353,897 2. If the sales required in item #1 is realized, the company will have a margin of safety of a. P297,000 b. 61,875 units c. P825. d. 17.24% 3. If the sales required in item #1 is realized, the company will have an operating leverage factor of a. 8.53 b. 5.80 c. 17.24% d. 5.50
For Items 1-3 A company is making plans for next year, using CVP analysis as its planning tool. Next year's sales data about its product are as follows: Selling Price Variable manufacturing cost per unit Variable selling and administrative expenses Fixed Operating Costs Income Tax Rate 60.00 22.50 4.50 148,500.00 30% 1. Assume that the company's management learned that a new technology that will increase the quality of its product is available. If implemented, its projections for next year will change: i. The selling price of the product will increase to P75 per unit. ii. Fixed manufacturing costs will increase by 20%. iii. Additional advertising costs will be incurred to promote the higher-quality product. This will increase fixed manufacturing costs by 10%. iv. The improved product cost will require a new material that will increase direct materials cost by P4.50 % reque the If the new technology adapted, how much sales should the company make to earn a profit of 10% on sales? a. P366,130 b. P358,875 c. P253,324 d. P353,897 2. If the sales required in item #1 is realized, the company will have a margin of safety of a. P297,000 b. 61,875 units c. P825. d. 17.24% 3. If the sales required in item #1 is realized, the company will have an operating leverage factor of a. 8.53 b. 5.80 c. 17.24% d. 5.50
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter12: Activity-based Management
Section: Chapter Questions
Problem 19E: A company is spending 70,000 per year for inspecting, 60,000 per year for purchasing, and 56,000 per...
Related questions
Question
please answer with complete solution
Transcribed Image Text:For Items 1-3
A company is making plans for next year, using CVP analysis as its planning tool.
Next year's sales data about its product are as follows:
Selling Price
Variable manufacturing cost per unit
Variable selling and administrative expenses
Fixed Operating Costs
Income Tax Rate
60.00
22.50
4.50
148,500.00
30%
1. Assume that the company's management learned that a new technology that will increase the quality of its
product is available. If implemented, its projections for next year will change:
i. The selling price of the product will increase to P75 per unit.
ii. Fixed manufacturing costs will increase by 20%.
iii. Additional advertising costs will be incurred to promote the higher-quality product. This
will increase fixed manufacturing costs by 10%.
iv. The improved product cost will require a new material that will increase direct materials
cost by P4.50
% reque the
If the new technology adapted, how much sales should the company make to earn a profit of 10% on sales?
a. P366,130
b. P358,875
c. P253,324
d. P353,897
2. If the sales required in item #1 is realized, the company will have a margin of safety of
a. P297,000
b. 61,875 units
c.
P825.
d. 17.24%
3. If the sales required in item #1 is realized, the company will have an operating leverage factor of
a. 8.53
b. 5.80
c.
17.24%
d.
5.50
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning