Green Thumb makes small plant stands that sell for P25 each. The company's annual level of production and sales is 120,000 units. In addition to P430,500 of fixed manufacturing overhead and P159,050 of fixed administraftive expenses, the following per-unit costs have been determined for each plant stand: Direct material P 6.00 Direct labor 3.00 Variable manufacturing overhead 2.20 P12.00 0.80 Variable selling expense Unit variable cost ==== Required: 1. Calculate the unit contribution margin and contribution margin percentage fora plant stand. 2 Determine the breakeven point in tems of number of plant stands. 3 Determine the breakeven sales in pesos. A Determine Green Thumb's margin of safety in units, in peso sales and as a percentage. 5. How many plant stands must the company sell to earn a pre-tax profit of P996.450. 6. If the company wants to eam an after-tax profit of P657,800 and is subject to a 20% tax rate, how many units must be sold? 7. How many plant stands must be sold to breakeven if Green Thumb's fixed manufacturing cost increases by P7,865? (Use the original data) 8. The company has received an offer from a Brazilian Co. to buy 4,000 plant stands at P20 per unit. The per-unit variable selling cost of the additional units will be P2.80 (rather than P2.20) and P18.000 of additional fixed administrative cost will be incurred. This sale would not affect domestic sales or their cost. Based on quantitative factors alone, should Green Thumb accepf this offer?
Green Thumb makes small plant stands that sell for P25 each. The company's annual level of production and sales is 120,000 units. In addition to P430,500 of fixed manufacturing overhead and P159,050 of fixed administraftive expenses, the following per-unit costs have been determined for each plant stand: Direct material P 6.00 Direct labor 3.00 Variable manufacturing overhead 2.20 P12.00 0.80 Variable selling expense Unit variable cost ==== Required: 1. Calculate the unit contribution margin and contribution margin percentage fora plant stand. 2 Determine the breakeven point in tems of number of plant stands. 3 Determine the breakeven sales in pesos. A Determine Green Thumb's margin of safety in units, in peso sales and as a percentage. 5. How many plant stands must the company sell to earn a pre-tax profit of P996.450. 6. If the company wants to eam an after-tax profit of P657,800 and is subject to a 20% tax rate, how many units must be sold? 7. How many plant stands must be sold to breakeven if Green Thumb's fixed manufacturing cost increases by P7,865? (Use the original data) 8. The company has received an offer from a Brazilian Co. to buy 4,000 plant stands at P20 per unit. The per-unit variable selling cost of the additional units will be P2.80 (rather than P2.20) and P18.000 of additional fixed administrative cost will be incurred. This sale would not affect domestic sales or their cost. Based on quantitative factors alone, should Green Thumb accepf this offer?
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 7PB: Remarkable Enterprises requires four units of part A for every unit of Al that it produces....
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Transcribed Image Text:Green Thumb makes small plant stands that sell for P25 each. The company's annul
level of production and sales is 120,000 units. In addition to P430,500 of fixed
manufacturing overhead and P159,050 of fixed administrafive expenses, the following
per-unit costs have been determined for each plant stand:
Direct material
P 6.00
Direct labor
3.00
Variable manufacturing overhead
2.20
P12.00
0.80
Variable selling expense
Unit variable cost
Required:
1. Calculate the unit contribution margin and contribution margin percentage for a
plant stand.
2 Determine the breakeven point in terms of number of plant stands.
3 Determine the breakeven sales in pesos.
A Determine Green Thumb's margin of safety in units, in peso sales and as a
percentage.
5. How many plant stands must the company sell to earn a pre-tax profit of P996,450.
6. If the company wants to eam an after-tax profit of P657,800 and is subject to a 20%
tax rate, how many units must be sold?
7. How many plant stands must be sold to breakeven if Green Thumb's fixed
manufacturing cost increases by P7,865? (Use the original data)
8. The company has received an offer from a Brazilian Co. to buy 4,000 plant stands at
P20 per unit. The per-unit variable selling cost of the additional units will be P2.80
(rather than P2.20) and P18.000 of additional fixed administrative cost will be
incurred. This sale would not affect domestic sales or their cost. Based on
quantitative factors alone, should Green Thumb accept this offer?
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