Sunshine Company’s single product has a selling price of P25 per unit. Last year the company reported a profit of P20,000 and variable expenses totaling P180,000. The product has a 40% contribution ratio. Because of competition, Sunshine Company will be forced in the current year to reduce its selling price by P2 per unit. How many units must be sold in the current year to earn the same profit as was earned last year? (Hint: Prepare last year’s income statement, then, prepare the current year using the new price) 15,000 units 12,000 units 16,500 units 12,960 units
Sunshine Company’s single product has a selling price of P25 per unit. Last year the company reported a profit of P20,000 and variable expenses totaling P180,000. The product has a 40% contribution ratio. Because of competition, Sunshine Company will be forced in the current year to reduce its selling price by P2 per unit. How many units must be sold in the current year to earn the same profit as was earned last year? (Hint: Prepare last year’s income statement, then, prepare the current year using the new price) 15,000 units 12,000 units 16,500 units 12,960 units
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Sunshine Company’s single product has a selling price of P25 per unit. Last year the company reported a profit of P20,000 and variable expenses totaling P180,000. The product has a 40% contribution ratio. Because of competition, Sunshine Company will be forced in the current year to reduce its selling price by P2 per unit. How many units must be sold in the current year to earn the same profit as was earned last year?
(Hint: Prepare last year’s income statement, then, prepare the current year using the new price)
- 15,000 units
- 12,000 units
- 16,500 units
- 12,960 units
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