A telephone company have a production capacity of 500,000 units per month. At its present capacity of 3 50,000 units per month, the company have monthly income of ₱350,000,000. The company has a fixed cost of ₱100,000,000 per month and a variable cost of ₱200 per unit. a. What is the present profit or loss in millions of pesos? b. What is the break-even quantity? c. If the production is increased to 80% of its capacity, what is the profit or loss in millions of pesos?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
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A telephone company have a production capacity of 500,000 units per month. At its present capacity of 3 50,000 units per month, the company have monthly income of ₱350,000,000. The company has a fixed cost of ₱100,000,000 per month and a variable cost of ₱200 per unit.

a. What is the present profit or loss in millions of pesos?

b. What is the break-even quantity?

c. If the production is increased to 80% of its capacity, what is the profit or loss in millions of pesos?

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