The length of his lease is 5 years. If the average charge for each car repair by his shop is P1,000. Determine the number of cars ke must service in one year so that he will obtain a profit of at least 20% on his investment?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A man formerly employed as a chief mechanic of an automobile
repair shop has saved P1,000,000 which are now invested in certain
securities giving him an annual dividend of 15%. He now plans to
invest this amount in his own repair shop. In his present job, he is
earning P25,000 per month, but he has to resign to run his own
business. He will need the services of the following: 2 mechanics
each earning P400 a day, and 8 helpers earning P200 a day. These
men will work on average 300 days a year. His other expenses are
the following:
Rental
= P30,000 a month
Miscellaneous = P25,000 a month
Sales tax
= 3% of gross income
Insurance
= 2%
The Length of his lease is 5 years. If the average charge for each car
repair by his shop is P1,000. Determine the number of cars he must
service in one year so that he will obtain a profit of at least 20%
on his investment?
Transcribed Image Text:A man formerly employed as a chief mechanic of an automobile repair shop has saved P1,000,000 which are now invested in certain securities giving him an annual dividend of 15%. He now plans to invest this amount in his own repair shop. In his present job, he is earning P25,000 per month, but he has to resign to run his own business. He will need the services of the following: 2 mechanics each earning P400 a day, and 8 helpers earning P200 a day. These men will work on average 300 days a year. His other expenses are the following: Rental = P30,000 a month Miscellaneous = P25,000 a month Sales tax = 3% of gross income Insurance = 2% The Length of his lease is 5 years. If the average charge for each car repair by his shop is P1,000. Determine the number of cars he must service in one year so that he will obtain a profit of at least 20% on his investment?
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