The Valdez Mug Company manufactures plastic mugs that sell to wholesalers for P4.00 each. Variable and fixed costs are as follows: Valdez Mug produced and sold 10,000 cups during April 2019. There were no beginning or ending inventories. Required: a. Determine Valdez Mug's monthly break-even point in units. b. If monthly sales increase by 500 cups, what will be the change in monthly profits? c. If Valdez Mug is now subject to an income tax of 40 percent, what dollar sales volume is required to earn a monthly after-tax net income of P12,000?
The Valdez Mug Company manufactures plastic mugs that sell to wholesalers for P4.00 each. Variable and fixed costs are as follows: Valdez Mug produced and sold 10,000 cups during April 2019. There were no beginning or ending inventories. Required: a. Determine Valdez Mug's monthly break-even point in units. b. If monthly sales increase by 500 cups, what will be the change in monthly profits? c. If Valdez Mug is now subject to an income tax of 40 percent, what dollar sales volume is required to earn a monthly after-tax net income of P12,000?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The Valdez Mug Company manufactures plastic mugs that sell to wholesalers for P4.00
each. Variable and fixed costs are as follows:
Valdez Mug produced and sold 10,000 cups during April 2019. There were no beginning or ending inventories.
Required:
a. Determine Valdez Mug's monthly break-even point in units.
b. If monthly sales increase by 500 cups, what will be the change in monthly profits?
c. If Valdez Mug is now subject to an income tax of 40 percent, what dollar sales volume is required to earn a monthly after-tax net income of P12,000?
Transcribed Image Text:Variable Costs per Unit
Fixed Costs per Month
Manufacturing:
Direct materials
P 8,000
6,000
P14,000
PO.60
Factory overhead
Selling and adm.
Total
Direct labor
0.70
0.50
Factory overhead
Selling and adm.
Total
P1.80
0.40
P2.20
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Includes step-by-step video
Learn your way
Includes step-by-step video
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education