A man formerly employed as a chief mechanic of an automobilerepair shop has saved P1,000,000 which are now invested in certainsecurities giving him an annual dividend of 15%. He now plans toinvest this amount in his own repair shop. In his present job, he isearning P25,000 per month, but he has to resign to run his ownbusiness. He will need the services of the following: 2 mechanicseach earning P400 a day, and 8 helpers earning P200 a day. Thesemen will work on average 300 days a year. His other expenses arethe following:Rental= P30,000 a monthMiscellaneous = P25,000 a monthSales tax= 3% of gross incomeInsurance= 2%The Length of his lease is 5 years. If the average charge for each carrepair by his shop is P1,000. Determine the number of cars he mustservice in one year so that he will obtain a profit of at least 20%on his investment?

Answer with all calculation are as follows:

Answered: The length of his lease is 5 years. If…

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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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?