Daniel sells a single product at P20 per unit. The firm's most recent income statement revealed unit sales of 100,000, variable costs of P800,000, and fixed costs of P400,000. If a P4 drop in selling price will boost unit sales volume by 20%, the company will experience:no change in profit because a 20% drop in sales price is balanced by a 20% increase in volume.an P80,000 drop in profitability.a P240,000 drop in profitability.a P400,000 drop in profitability.a change in profitability other than those above.

The question is based on the concept of Cost Accounting.

Answered: Daniel sells a single product at P20…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5EB: Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90....

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Daniel sells a single product at P20 per unit. The firm's most recent income statement revealed unit sales of 100,000, variable costs of P800,000, and fixed costs of P400,000. If a P4 drop in selling price will boost unit sales volume by 20%, the company will experience:

no change in profit because a 20% drop in sales price is balanced by a 20% increase in volume.
an P80,000 drop in profitability.
a P240,000 drop in profitability.
a P400,000 drop in profitability.
a change in profitability other than those above.

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