The selling price that would maintain the same contribution margin rate as last year is P9.00P8.25P10.00P9.75 The National Co. manufactures and sells tote bags. Last year, the bags sold for P7.50 each, andthe variable cost to manufacture them was P2.25 per unit. The company needed to sell 20,000bags to break-even. The net income last year was P5,040. Nationals expectations for the comingyear include the following:1. The sales price of the bags will be P92. Variable cost to manufacture will increase by one-third3. Fixed costs will increase by 10%4. The income tax rate of 40% will be unchanged

Solution Working note Calculation of contribution margin rate last year =selling price – variable…

Answered: The selling price that would maintain…

Business

Accounting

The selling price that would maintain the same contribution margin rate as last year is P9.00 P8.25 P10.00 P9.75

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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Question

The selling price that would maintain the same contribution margin rate as last year is

P9.00

P8.25

P10.00

P9.75

The National Co. manufactures and sells tote bags. Last year, the bags sold for P7.50 each, and
the variable cost to manufacture them was P2.25 per unit. The company needed to sell 20,000
bags to break-even. The net income last year was P5,040. Nationals expectations for the coming
year include the following:
1. The sales price of the bags will be P9
2. Variable cost to manufacture will increase by one-third
3. Fixed costs will increase by 10%
4. The income tax rate of 40% will be unchanged

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