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ABC Manufacturing is a producer of a local product used in house cleaning, called Agent C. The production manager is required to present a production report for the month August, however he got no idea on what information he needed for the report, and what analysis could be made to help the top management on their decision-making. The production manager sought your expertise on the subject matter and gave to you the following information: Sales (in Pesos) 4,957,875.00 Sales Volume 22,500.00 Variable Costs: Cost of Direct Raw Materials 895,000.00 Cost of Direct Labor 530,000.00 Cost of Packaging Materials 124,200.00 Fixed Costs: Monthly Depreciation Monthly Rent of Warehouse 650,000.00 100,000.00 Fixed Monthly Allowance for Electricity Other Fixed Manufacturing Overhead 675,000.00 146,700.00 Required: 13. If the fixed cost is increased by P 500,000 per month and 20% income tax is imposed on the net income, compute the following: How many units must ABC produce and sell to breakeven? b. With this proposed changes, how many units more or units less that ABC must produce to reach breakeven compared to the current breakeven? How many units must ABC produce and sell to achieve a profit of P 2,000,000? d. Assuming the above changes, what price per unit must be charged if the current breakeven units must be maintained? e. Using the information in letter (d), what will be effect to the contribution margin rate? а. C.

ABC Manufacturing is a producer of a local product used in house cleaning, called Agent C. The production manager is required to present a production report for the month August, however he got no idea on what information he needed for the report, and what analysis could be made to help the top management on their decision-making. The production manager sought your expertise on the subject matter and gave to you the following information: Sales (in Pesos) 4,957,875.00 Sales Volume 22,500.00 Variable Costs: Cost of Direct Raw Materials 895,000.00 Cost of Direct Labor 530,000.00 Cost of Packaging Materials 124,200.00 Fixed Costs: Monthly Depreciation Monthly Rent of Warehouse 650,000.00 100,000.00 Fixed Monthly Allowance for Electricity Other Fixed Manufacturing Overhead 675,000.00 146,700.00 Required: 13. If the fixed cost is increased by P 500,000 per month and 20% income tax is imposed on the net income, compute the following: How many units must ABC produce and sell to breakeven? b. With this proposed changes, how many units more or units less that ABC must produce to reach breakeven compared to the current breakeven? How many units must ABC produce and sell to achieve a profit of P 2,000,000? d. Assuming the above changes, what price per unit must be charged if the current breakeven units must be maintained? e. Using the information in letter (d), what will be effect to the contribution margin rate? а. C.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter1: Introduction To Cost Management
Section: Chapter Questions
Problem 12P: Emery Manufacturing Company produces component parts for the farm equipment industry and has...
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ABC Manufacturing is a producer of a local product used in house cleaning, called Agent C. The production manager is required to present a production report for the month August, however he got no idea on what information he needed for the report, and what analysis could be made to help the top management on their decision-making. The production manager sought your expertise on the subject matter and gave to you the following information: Sales (in Pesos) 4,957,875.00 Sales Volume 22,500.00 Variable Costs: Cost of Direct Raw Materials 895,000.00 Cost of Direct Labor 530,000.00 Cost of Packaging Materials 124,200.00 Fixed Costs: Monthly Depreciation Monthly Rent of Warehouse Fixed Monthly Allowance for Electricity 650,000.00 100,000.00 675,000.00 Other Fixed Manufacturing Overhead 146,700.00 Required: 13. If the fixed cost is increased by P 500,000 per month and 20% income tax is imposed on the net income, compute the following: a. How many units must ABC produce and sell to breakeven? b. With this proposed changes, how many units more or units less that ABC must produce to reach breakeven compared to the current breakeven? How many units must ABC produce and sell to achieve a profit of P 2,000,000? d. Assuming the above changes, what price per unit must be charged if the current breakeven units must be maintained? C. e. Using the information in letter (d), what will be effect to the contribution margin rate?
Transcribed Image Text:ABC Manufacturing is a producer of a local product used in house cleaning, called Agent C. The production manager is required to present a production report for the month August, however he got no idea on what information he needed for the report, and what analysis could be made to help the top management on their decision-making. The production manager sought your expertise on the subject matter and gave to you the following information: Sales (in Pesos) 4,957,875.00 Sales Volume 22,500.00 Variable Costs: Cost of Direct Raw Materials 895,000.00 Cost of Direct Labor 530,000.00 Cost of Packaging Materials 124,200.00 Fixed Costs: Monthly Depreciation Monthly Rent of Warehouse Fixed Monthly Allowance for Electricity 650,000.00 100,000.00 675,000.00 Other Fixed Manufacturing Overhead 146,700.00 Required: 13. If the fixed cost is increased by P 500,000 per month and 20% income tax is imposed on the net income, compute the following: a. How many units must ABC produce and sell to breakeven? b. With this proposed changes, how many units more or units less that ABC must produce to reach breakeven compared to the current breakeven? How many units must ABC produce and sell to achieve a profit of P 2,000,000? d. Assuming the above changes, what price per unit must be charged if the current breakeven units must be maintained? C. e. Using the information in letter (d), what will be effect to the contribution margin rate?
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