2. Foxx Company manufactures water sealant. This sealant is used to stop leaks in basement or in concrete retainer walls. In 2019 the company sold 1.6M gallons of sealant at price of P3.00 per gallon with a variable cost per gallon of P1.50. The fixed costs were P1,550,000 In 2020, new automated equipment will be used in production. This will increase fixed costs for the year to P1,785,000. The variable cost per gallon has been estimated at P1.30 per gallon. The sales volume increased by 15% percent in 2020. Required: 1. For 2019 compute the BEP in gallons and pesos. 2. For 2020 compute the BEP in gallons and pesos. 3. How much is the EBIT for 2019 & 2020 4.Using the cost and revenue data for 2019 consider each of the following situations independently: a. What is the effect on the break even point (in gallons) for the decrease in variable cost from P1.50 to P1.30? b. What is the effect on the break even point for the increase in fixed costs of P235,000?
2. Foxx Company manufactures water sealant. This sealant is used to stop leaks in basement or
in concrete retainer walls. In 2019 the company sold 1.6M gallons of sealant at price of P3.00
per gallon with a variable cost per gallon of P1.50. The fixed costs were P1,550,000
In 2020, new automated equipment will be used in production. This will increase fixed costs
for the year to P1,785,000. The variable cost per gallon has been estimated at P1.30 per gallon.
The sales volume increased by 15% percent in 2020.
Required:
1. For 2019 compute the BEP in gallons and pesos.
2. For 2020 compute the BEP in gallons and pesos.
3. How much is the EBIT for 2019 & 2020
4.Using the cost and revenue data for 2019 consider each of the following situations
independently:
a. What is the effect on the break even point (in gallons) for the decrease in variable cost from
P1.50 to P1.30?
b. What is the effect on the break even point for the increase in fixed costs of P235,000?
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