The following data apply to Diva Corporation for the year 2006: Total variable cost per unit P3.50 Contribution margin/sales 30% Breakeven sales (present volume) P1,000,000 Diva wants to sell an additional 50,000 units at the same selling price and contribution margin per unit. By how much can fixed costs increase to generate a gross margin equal to 10% of the sales value of the additional 50,000 units to be sold?

The following data apply to Diva Corporation for the year 2006: Total variable cost per unit P3.50 Contribution margin/sales 30% Breakeven sales (present volume) P1,000,000 Diva wants to sell an additional 50,000 units at the same selling price and contribution margin per unit. By how much can fixed costs increase to generate a gross margin equal to 10% of the sales value of the additional 50,000 units to be sold?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: 1) What were Lakspur's total fixed costs? if the average selling price was $2.05, howw much gross…

A: • Total fixed costs = $400,000This is calculated by multiplying the fixed cost per unit ($0.20) by…

Q: A company's fixed operating costs are $310,000, its variable costs are $3.65 per unit, and the…

A: Break even is the point at which the revenue generated becomes equal to the total costs. Fixed Cost…

Q: Spice Inc.'s unit selling price is $53, the unit variable costs are $34, fixed costs are $101,000,…

A: Income statement is a financial statement that shows the profitability, total revenue and total…

Q: I. What is the break- even point in dollar sales? J. How many units must be sold to achieve a…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: REQUIRED Use the information provided below to answer the following questions independently: 3.2.1…

A: The income is calculated as the difference between the revenue and expenses. The contribution margin…

Q: 7. the maximum that they can increase the fixed cost? Company ET 's fixed costs were $40 000,…

A: Approach: Let FC be the fixed cost, VC as the variable cost, S as the sales, TC as the total cost,…

Q: Rooney Company reported the following data regarding the product it sells: Sales price Contribution…

A: Break even point means a situation where the is neither profit nor loss. Sales revenue is sufficient…

Q: A company has provided the following data: Sales 2,000 units Sales price $50/unit Variable cost…

A: Variable costs are costs which changes along with change in sales activity level. Fixed costs do not…

Q: Papaya Corporation has the following product information: Sales price $9.00per unit $5.00per unit…

A: Calculation of operating income when sale price is $9 CALCULATION PARTICULAR AMOUNT A…

Q: Sundial, Inc., produces two models of sunglasses-AU and NZ. the sunglasses have the following…

A: Contribution means the difference between the selling price and variable cost . Fixed cost when…

Q: Mazoon Company's variable costs are 75% of the selling price and its fixed costs are $80,00O. To…

A: Break even point means a point where firm is neither earning profit nor incurring any loss. For…

Q: If the contribution margin on the firm's single product is $2.00 per unit and fixed costs are…

Q: Mazoon Company's variable costs are 75% of the selling price and its fixed costs are $80,000. To…

A: As per CVP equation, Contribution margin ratio = 1 - variable cost ratio Fixed costs + Profits =…

Q: Swifty Corporation is planning to sell 810000 units for $1.50 per unit. The contribution margin…

A: Break-Even Sales: Sales volume required to cover the fixed and variable costs and left out with…

Q: The current situation of XZ company is as follows: Variable costs are 84% of sales and fixed costs…

A: Step 1:Current situation Contribution= sales - variable cost Contribution margin/ PV ratio= 100-…

Q: please step by step solution.

A: The contribution margin is the revenue remaining after subtracting the variable costs that go into…

Q: A company’s sales figure is £250,000 and its margin of safety ratio is 40%. Assuming that the fixed…

A: The margin of safety sales is the difference between the current sales and break even sales.

Question

The following data apply to Diva Corporation for the year 2006:

Total variable cost per unit P3.50

Contribution margin/sales 30%

Breakeven sales (present volume) P1,000,000

Diva wants to sell an additional 50,000 units at the same selling

price and contribution margin per unit. By how much can fixed

costs increase to generate a gross margin equal to 10% of the sales

value of the additional 50,000 units to be sold?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

INTRODUCTION

VIEW

ANSWER

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Zachia Ltd provides the following data regarding its four product lines: Product Sales mix Weighted average contribution margin per unit (WACMU) Fixed costs Desired profit after tax w Y 60 20 15 $13.7 $71,000 $33,950 The corporate tax rate is 30% Required Calculate the number of units of Product X that must be sold in order to achieve the desired after-tax profit?
Witrox Bhd sells two models of smartphone, the Oppo and the Xiaomi. Oppo RM 60.0 35.0 25.0 Sales price per unit Variable cost per unit Contribution margin per unit Witrox has determined that it would break even at an annual sales volume of 50,000 units, of which 75% would be Oppo. Required: a) What are the contribution margin ratios for each product and the company? b) What is the amount of Witrox's estimated annual fixed costs? Xiaomi RM 85.0 54.0 31.0 c) What is the sales mix? d) Prepare a product line income statement with operating income of RM500,000. Fixed production costs will increase RM45,000 and fixed administrative costs will increase RM22,500 to support the increase in volume.
Ajani Company has variable costs equal to 40% of sales. The company is considering a proposal that will increase sales by $10,000 and total fixed costs by $6,000. By what amount will net income increase? A. $6,000 B. $4,000 C. $2,000 D. $0
Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics: Sales price $ 12.00 per case Variable costs 5.50 per case Fixed costs 403,000 per year Assume that the company plans to sell 77,000 units annually. Consider requirements (b), (c), and (d) independently of each other. Required: What will be the operating profit? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? Note: Do not round intermediate calculations. What is the impact on operating profit if variable costs per unit decrease by 20 percent? Increase by 10 percent? Note: Do not round intermediate calculations. Suppose that fixed costs for the year are 20 percent lower than projected and variable costs per unit are 20 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? Note: Do not round intermediate…
P Company has provided the following data: Sales Price per unit: $50. Variable Cost per unit: $30; Fixed Cost: $135,000 Expected Sales: 20,000 units. d. Determine the margin of safety in dollars. e. If the company wants to have net income of $70,000, how many units must they sell.