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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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 in selling price
- 20% increase in variable costs
- 50% increase in fixed costs
- 5% increase in sales and production volume
- Decrease of P30,000 in fixed costs
- Decrease in variable costs of P0.20
- Decrease in variable costs of P0.60 and 20% increase in selling price
- 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.
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 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education