Original DVD player sales and cost data for ABC Video: Unit Selling Price: Php 500 Php 300 Php 200,000 Unit variable cost: Total fixed cost: Break-even sales: Php 500,000 or 1,000 units Case I: A competitor is offering a 10% discount on the selling price of its DVD players. Management must decide whether to offer a similar discount. What effect will a 10% discount on selling price have on the breakeven point? Case II: Management invests in new robotic equipment that will lower the amount of direct labor required to make DVD players. Estimates are that total fixed costs will increase 30% and that variable cost per unit will decrease 30%. What effect will the new equipment have on the sales volume required to break even? Case III: ABC principal supplier of raw materials has just announced a price increase. The higher cost is expected to increase the variable cost of DVD players by $25 per unit. Management decides to hold the line on the selling price of the DVD players. It plans a cost-cutting program that will save $17,500 in fixed costs per month. Vargo is currently realizing monthly net income of $80,00o on sales of 1,400 DVD players. What increase in units sold will be needed to maintain the same level of net income?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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MANAGERIAL ACCOUNTING

Solve the following:
Original DVD player sales and cost data for ABC Video:
Unit Selling Price: Php 500
Unit variable cost: Php 300o
Total fixed cost:
Php 200,000
Break-even sales:
Php 500,000 Or 1,000 units
Case I: A competitor is offering a 10% discount on the selling price of its DVD players. Management must decide whether to offer a similar discount. What effect will a
10% discount on selling price have on the breakeven point?
Case II: Management invests in new robotic equipment that will lower the amount of direct labor required to make DVD players. Estimates are that total fixed costs will
increase 30% and that variable cost per unit will decrease 30%. What effect will the new equipment have on the sales volume required to break even?
Case III: ABC principal supplier of raw materials has just announced a price increase. The higher cost is expected to increase the variable cost of DVD players by $25 per
unit. Management decides to hold the line on the selling price of the DVD players. It plans a cost-cutting program that will save $17,500 in fixed costs per month. Vargo is
currently realizing monthly net income of $80,000 on sales of 1,400 DVD players. What increase in units sold will be needed to maintain the same level of net income?
Transcribed Image Text:Solve the following: Original DVD player sales and cost data for ABC Video: Unit Selling Price: Php 500 Unit variable cost: Php 300o Total fixed cost: Php 200,000 Break-even sales: Php 500,000 Or 1,000 units Case I: A competitor is offering a 10% discount on the selling price of its DVD players. Management must decide whether to offer a similar discount. What effect will a 10% discount on selling price have on the breakeven point? Case II: Management invests in new robotic equipment that will lower the amount of direct labor required to make DVD players. Estimates are that total fixed costs will increase 30% and that variable cost per unit will decrease 30%. What effect will the new equipment have on the sales volume required to break even? Case III: ABC principal supplier of raw materials has just announced a price increase. The higher cost is expected to increase the variable cost of DVD players by $25 per unit. Management decides to hold the line on the selling price of the DVD players. It plans a cost-cutting program that will save $17,500 in fixed costs per month. Vargo is currently realizing monthly net income of $80,000 on sales of 1,400 DVD players. What increase in units sold will be needed to maintain the same level of net income?
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