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Lee Gon Corporation has the following revenue and cost characteristics on their only product: Selling price per unit               P6.00 Variable cost per unit              P4.20 Annual fixed costs                  P360,000 Annual volume                        270,000 units Required: For each of the following independent cases, determine the new contribution margin ratio, break-even point in pesos, and net profit. 5% increase

Lee Gon Corporation has the following revenue and cost characteristics on their only product: Selling price per unit               P6.00 Variable cost per unit              P4.20 Annual fixed costs                  P360,000 Annual volume                        270,000 units Required: For each of the following independent cases, determine the new contribution margin ratio, break-even point in pesos, and net profit. 5% increase

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 6PA: Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit...
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Lee Gon Corporation has the following revenue and cost characteristics on their only product:

Selling price per unit               P6.00

Variable cost per unit              P4.20

Annual fixed costs                  P360,000

Annual volume                        270,000 units

Required:

For each of the following independent cases, determine the new contribution margin ratio, break-even point in pesos, and net profit.

  1. 5% increase in selling price
  2. 20% increase in variable costs
  3. 50% increase in fixed costs
  4. 5% increase in sales and production volume
  5. Decrease of P30,000 in fixed costs
  6. Decrease in variable costs of P0.20
  7. Decrease in variable costs of P0.60 and 20% increase in selling price
  8. 20% decrease in fixed costs and 20% increase in variable cost.

9.  Which among the various changes above will be the most beneficial to the company and which one will be the most detrimental? Justify your answer.

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