manufacturing company, Prince Concrete Manufacturing, Inc situated in General Santos City, has been known for production of quality cement products. In fact, it has the capacity to produce 2,500,000 bags of Type 1 Portland Cement per year considering its large-scale machineries for manufacturing
A manufacturing company, Prince Concrete Manufacturing, Inc situated in General Santos City, has been known for production of quality cement products. In fact, it has the capacity to produce 2,500,000 bags of Type 1 Portland Cement per year considering its large-scale machineries for manufacturing.
On its regular operations, the company is able to manufacture and sell only 1,250,000 bags of Type 1 Portland Cement per year at a total income of P 225,000,00.00. Annual fixed costs are estimated by Production Department are P 50,000,000.00 and the variable costs for maintenance and operating expenses per bag are P 110.00.
a. Determine the annual profit or loss of the company for this production.
b. How many bags of Type 1 Portland Cement should be sold per year to break – even? c. Due to high demand of cement because of massive infrastructure projects implicated by ‘Build!, Build!, Build!’ Program of this administration, the firm’s management decided to increase by 25% of full capacity, what will its profit or loss be, assuming that its income and variable cost per bag remain constant?
d. Draw a break – even chart indicating the above results in the chart.
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