1.Davao has a potential foreign customer that has offered to buy 1,500 tons at P450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity? 2. If the sales volume is estimated to be 2,100 tons in the next year, and if the prices and costs stay at the same levels and amounts next year, the after-tax income that Davao can expect for next year is ?3. The breakeven volume in tons of product for the year is ? Questions 5 to 8 are based on the Statement of Income of Davao, Inc. which representsthe operating results for the current fiscal year ending December 31. Davao had sales of1,800 tons of product during the current year. The manufacturing capacity of Davao'sfacilities is 3,000 tons of product. Consider each question's situation separately.Sales P900,000Variable costsManufacturingSelling costs 180,000Total variable costs P495,000Contribution margin P405,000P315,000Fixed costsP 90,000ManufacturingSellingAdministrationTotal fixed costsNet income before income taxes P157,500Income taxes (40%)(63,000)Net income after income taxes112,50045.000P247,500P 94,500

Breakeven point: Breakeven point is that level of sales at which the company does not make any…

Answered: 1.Davao has a potential foreign…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 3CMA

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1.Davao has a potential foreign customer that has offered to buy 1,500 tons at P450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity?

2. If the sales volume is estimated to be 2,100 tons in the next year, and if the prices and costs stay at the same levels and amounts next year, the after-tax income that Davao can expect for next year is ?

3. The breakeven volume in tons of product for the year is ?

Questions 5 to 8 are based on the Statement of Income of Davao, Inc. which represents
the operating results for the current fiscal year ending December 31. Davao had sales of
1,800 tons of product during the current year. The manufacturing capacity of Davao's
facilities is 3,000 tons of product. Consider each question's situation separately.
Sales P900,000
Variable costs
Manufacturing
Selling costs 180,000
Total variable costs P495,000
Contribution margin P405,000
P315,000
Fixed costs
P 90,000
Manufacturing
Selling
Administration
Total fixed costs
Net income before income taxes P157,500
Income taxes (40%)(63,000)
Net income after income taxes
112,500
45.000
P247,500
P 94,500

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