Mr. Josh Kho, the operations manager of Achos Merchandising Corp. Is worried about the result of its operation this year. Although the accounting dept. has not submitted the financial statements yet, the following data where already available pertaining to year 2020. Total number of units sold at P50 per unit price 120,000 units Total fixed costs and expenses P1,600,000 Variable cost rate 60% Because of other pressing problems, he hired you to give him information and computation that will help him plan for the next year operation. He specifically wants the following (with proofs, if possible): 1. Break-even point in peso sales and in units 2. The margin of safety in peso, in units and in percentage 3. If the profit this year will be doubled next year, how much sales should be realized?
Mr. Josh Kho, the operations manager of Achos Merchandising Corp. Is worried about the result of its operation this year. Although the accounting dept. has not submitted the financial statements yet, the following data where already available pertaining to year 2020. Total number of units sold at P50 per unit price 120,000 units Total fixed costs and expenses P1,600,000 Variable cost rate 60% Because of other pressing problems, he hired you to give him information and computation that will help him plan for the next year operation. He specifically wants the following (with proofs, if possible): 1. Break-even point in peso sales and in units 2. The margin of safety in peso, in units and in percentage 3. If the profit this year will be doubled next year, how much sales should be realized?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Answer all items with complete solution pls
![Mr. Josh Kho, the operations manager of Achos Merchandising Corp. Is worried
about the result of its operation this year. Although the accounting dept. has not
submitted the financial statements yet, the following data where already available
pertaining to year 2020.
Total number of units sold at P50 per unit price 120,000 units
Total fixed costs and expenses
P1,600,000
Variable cost rate
60%
Because of other pressing problems, he hired you to give him information and
computation that will help him plan for the next year operation. He specifically wants the
following (with proofs, if possible):
1. Break-even point in peso sales and in units
2. The margin of safety in peso, in units and in percentage
3. If the profit this year will be doubled next year, how much sales should be
realized?
4. If the number of units sold next year, exceeds the break-even point by 50,000
units, what is result of the operation?
5. If management projects a profit of P1,200,000 after the 25% tax, how many units
should be sold?
6. If the total peso sales generated next year is short by P1million in order to break-
even, what is the result of the operation?
7. If management wants 15% profit from sales, how many units should the
company sells?
8. What is the degree of operating leverage (DOL)? If management projects that
sales will reduce by 10% next year, what is the percentage decrease in
profit?
9. If the selling
variable
price per unit next year is reduced by 10% and an increase in
cost per unit by 5% due to the increase in the price of the supplier
but this will result in increase in quantity sold next year by 50%. What would be
the result of the operation? (use the contribution margin format)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F152fd672-d4a8-478e-a284-20c08400c0c0%2F84d8e2fc-8129-4ce3-a087-4f2db7df5825%2Fjqxgvfb_processed.png&w=3840&q=75)
Transcribed Image Text:Mr. Josh Kho, the operations manager of Achos Merchandising Corp. Is worried
about the result of its operation this year. Although the accounting dept. has not
submitted the financial statements yet, the following data where already available
pertaining to year 2020.
Total number of units sold at P50 per unit price 120,000 units
Total fixed costs and expenses
P1,600,000
Variable cost rate
60%
Because of other pressing problems, he hired you to give him information and
computation that will help him plan for the next year operation. He specifically wants the
following (with proofs, if possible):
1. Break-even point in peso sales and in units
2. The margin of safety in peso, in units and in percentage
3. If the profit this year will be doubled next year, how much sales should be
realized?
4. If the number of units sold next year, exceeds the break-even point by 50,000
units, what is result of the operation?
5. If management projects a profit of P1,200,000 after the 25% tax, how many units
should be sold?
6. If the total peso sales generated next year is short by P1million in order to break-
even, what is the result of the operation?
7. If management wants 15% profit from sales, how many units should the
company sells?
8. What is the degree of operating leverage (DOL)? If management projects that
sales will reduce by 10% next year, what is the percentage decrease in
profit?
9. If the selling
variable
price per unit next year is reduced by 10% and an increase in
cost per unit by 5% due to the increase in the price of the supplier
but this will result in increase in quantity sold next year by 50%. What would be
the result of the operation? (use the contribution margin format)
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