product sells for P60 per unit and has a CM ratio of 40%. The company's fixed expenses are P360,000 per year. The company plans to sell 17,000 bookbags this year. Required: a. What are the variable expenses per unit? b. Using the equation method: 1. What is the break-even point in units and in sales dollars? 2. What sales level in units and in sales dollars is required to earn an annual profit of P90,000? 3. Assume that through negotiation with the manufacturer the Super Sales Company is able to reduce its variable expenses by P3 per unit. What is the company's new break-even point in units and in sales dollars? c. Repeat (b) above using the formula method.
product sells for P60 per unit and has a CM ratio of 40%. The company's fixed expenses are P360,000 per year. The company plans to sell 17,000 bookbags this year. Required: a. What are the variable expenses per unit? b. Using the equation method: 1. What is the break-even point in units and in sales dollars? 2. What sales level in units and in sales dollars is required to earn an annual profit of P90,000? 3. Assume that through negotiation with the manufacturer the Super Sales Company is able to reduce its variable expenses by P3 per unit. What is the company's new break-even point in units and in sales dollars? c. Repeat (b) above using the formula method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Question: Answer required B 1, 2, 3 with solutions
Transcribed Image Text:wwwwwwwwm
2. Pantok Company is the exclusive distributor for a revolutionary bookbag. The
product sells for P60 per unit and has a CM ratio of 40%. The company's fixed
expenses are P360,000 per year. The company plans to sell 17,000 bookbags
this year.
Required:
a. What are the variable expenses per unit?
b. Using the equation method:
1.
What is the break-even point in units and in sales dollars?
2. What sales level in units and in sales dollars is required to earn an
annual profit of P90,000?
3. Assume that through negotiation with the manufacturer the Super
Sales Company is able to reduce its variable expenses by P3 per unit.
What is the company's new break-even point in units and in sales
dollars?
c. Repeat (b) above using the formula method.
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 with 7 images
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