PROBLEM 3. The income statement of Sandra Company follows: Sales Less Variable expenses Contribution margin Less Fixed costs P500,000 (275.000) 225,000 (180,000) P 45,000 Operating income Sandra produces and sells a single product. The above income statement is based on sales of 100,000 units. Requirements: 1. Compute the breakeven point in units and in pesos. 2. Suppose that the selling price increases by 10 percent. Will the breakeven increase or decrease? 3. Suppose that the variable cost per unit increases by P0.35. What will happen to breakeven point? 4. Can you predict whether the breakeven increases or decreases if both the selling price and the unit variable cost increase? Recompute the breakeven point by incorporating both the changes in requirement 2 and 3. 5. Assume that total fixed costs increase by P50,000. Will the breakeven point change?
PROBLEM 3. The income statement of Sandra Company follows: Sales Less Variable expenses Contribution margin Less Fixed costs P500,000 (275.000) 225,000 (180,000) P 45,000 Operating income Sandra produces and sells a single product. The above income statement is based on sales of 100,000 units. Requirements: 1. Compute the breakeven point in units and in pesos. 2. Suppose that the selling price increases by 10 percent. Will the breakeven increase or decrease? 3. Suppose that the variable cost per unit increases by P0.35. What will happen to breakeven point? 4. Can you predict whether the breakeven increases or decreases if both the selling price and the unit variable cost increase? Recompute the breakeven point by incorporating both the changes in requirement 2 and 3. 5. Assume that total fixed costs increase by P50,000. Will the breakeven point change?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:PROBLEM 3. The income statement of Sandra Company
follows:
Sales
Less Variable expenses
Contribution margin
Less Fixed costs
P500,000
(275.000)
225,000
(180,000)
P 45,000
Operating income
Sandra produces and sells a single product. The above income
statement is based on sales of 100,000 units.
Requirements:
1. Compute the breakeven point in units and in pesos.
2. Suppose that the selling price increases by 10 percent.
Will the breakeven increase or decrease?
3. Suppose that the variable cost per unit increases by P0.35.
What will happen to breakeven point?
Can you predict whether the breakeven increases or
decreases if both the selling price and the unit variable
cost increase? Recompute the breakeven point by
incorporating both the changes in requirement 2 and 3.
5. Assume that total fixed costs increase by P50,000. Will the
breakeven point change?
4.
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