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Snow Company presented the following data relating to their product.: Cost per unit: Direct Materials Direct Labor P8.0 6.0 Variable Factory Overhead Fixed Factory Overhead (based on a normal capacity Of 10,000 units) 4.0 2.0 The total fixed operating costs amounted to P40,000 and the variable selling and administrative expenses were P20,00. • The product sells for P25.00/unit and the company produced 12,000 units and sold 10,000 during the month. Requirement: 1. Their selling price/unit to achieve a net income of P21,000 before tax, assuming that the company shall be spending an additional P15,000 for advertising in order to increase its present sales volume by 20%. 2. Considering your recommended SPU in #4 and further assuming that the total fixed costs inclusive of advertising amount to 75,000, their break-even sales in units. 3. Supposing that the total break-even sales were P350,000 and considering the given fixed costs, their maximum amount that they could spend for advertising?

Snow Company presented the following data relating to their product.: Cost per unit: Direct Materials Direct Labor P8.0 6.0 Variable Factory Overhead Fixed Factory Overhead (based on a normal capacity Of 10,000 units) 4.0 2.0 The total fixed operating costs amounted to P40,000 and the variable selling and administrative expenses were P20,00. • The product sells for P25.00/unit and the company produced 12,000 units and sold 10,000 during the month. Requirement: 1. Their selling price/unit to achieve a net income of P21,000 before tax, assuming that the company shall be spending an additional P15,000 for advertising in order to increase its present sales volume by 20%. 2. Considering your recommended SPU in #4 and further assuming that the total fixed costs inclusive of advertising amount to 75,000, their break-even sales in units. 3. Supposing that the total break-even sales were P350,000 and considering the given fixed costs, their maximum amount that they could spend for advertising?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Snow Company presented the following data relating to their product.: Cost per unit: Direct Materials Direct Labor P8.0 6.0 Variable Factory Overhead Fixed Factory Overhead (based on a normal capacity Of 10,000 units) 4.0 2.0 The total fixed operating costs amounted to P40,000 and the variable selling and administrative expenses were P20,00. • The product sells for P25.00/unit and the company produced 12,000 units and sold 10,000 during the month. Requirement: 1. Their selling price/unit to achieve a net income of P21,000 before tax, assuming that the company shall be spending an additional P15,000 for advertising in order to increase its present sales volume by 20%. 2. Considering your recommended SPU in #4 and further assuming that the total fixed costs inclusive of advertising amount to 75,000, their break-even sales in units. 3. Supposing that the total break-even sales were P350,000 and considering the given fixed costs, their maximum amount that they could spend for advertising?
Transcribed Image Text:Snow Company presented the following data relating to their product.: Cost per unit: Direct Materials Direct Labor P8.0 6.0 Variable Factory Overhead Fixed Factory Overhead (based on a normal capacity Of 10,000 units) 4.0 2.0 The total fixed operating costs amounted to P40,000 and the variable selling and administrative expenses were P20,00. • The product sells for P25.00/unit and the company produced 12,000 units and sold 10,000 during the month. Requirement: 1. Their selling price/unit to achieve a net income of P21,000 before tax, assuming that the company shall be spending an additional P15,000 for advertising in order to increase its present sales volume by 20%. 2. Considering your recommended SPU in #4 and further assuming that the total fixed costs inclusive of advertising amount to 75,000, their break-even sales in units. 3. Supposing that the total break-even sales were P350,000 and considering the given fixed costs, their maximum amount that they could spend for advertising?
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