Troye Corporation has just increased its manufacturing capacity to enable it to introduce new models of bicycles which it could not produce in the past due to capacity constraints. For the coming period, Troye is planning to start the production of a new model, which could either be the For Mountain Bike or For Racing Bike. A recently concluded feasibility study on the two models showed the following results: Mountain Bike Racing Bike Selling price P4,400 P4,000 Variable Cost 2,640 2,640 Total fixed costs: If only Mountain Bike is produced P3,696,000 If only Racing Bike is produced P3,168,000 Projected sales per year - Between 4,500 to 6,500 of either model a. What is the peso break-even point of each model of bike? b. What is the total peso sales at which Bisikleta would make the same profit or loss regardless of the bike model it decided to produce? c. If projected sales is guaranteed at 6,000 units, which model should the company produce?
Troye Corporation has just increased its manufacturing capacity to enable it to introduce new
models of bicycles which it could not produce in the past due to capacity constraints. For the
coming period, Troye is planning to start the production of a new model, which could either
be the For Mountain Bike or For Racing Bike.
A recently concluded feasibility study on the two models showed the following results:
Mountain Bike Racing Bike
Selling
Variable Cost 2,640 2,640
Total fixed costs:
If only Mountain Bike is produced P3,696,000
If only Racing Bike is produced P3,168,000
Projected sales per year - Between 4,500 to 6,500 of either model
a. What is the peso break-even point of each model of bike?
b. What is the total peso sales at which Bisikleta would make the same profit or loss regardless of
the bike model it decided to produce?
c. If projected sales is guaranteed at 6,000 units, which model should the company produce?
Support your answers thru computation.
Step by step
Solved in 2 steps
