PROBLEM 3. The income statement of Sandra Company follows: Sales Less Variable expenses Contribution margin Less Fixed costs P500,000 (275.000) 225,000 (180,000) P 45,000 Operating income Sandra produces and sells a single product. The above income statement is based on sales of 100,000 units. Requirements: 1. Compute the breakeven point in units and in pesos. 2. Suppose that the selling price increases by 10 percent. Will the breakeven increase or decrease? 3. Suppose that the variable cost per unit increases by P0.35. What will happen to breakeven point? 4. Can you predict whether the breakeven increases or decreases if both the selling price and the unit variable cost increase? Recompute the breakeven point by incorporating both the changes in requirement 2 and 3. 5. Assume that total fixed costs increase by P50,000. Will the breakeven point change?
PROBLEM 3. The income statement of Sandra Company follows: Sales Less Variable expenses Contribution margin Less Fixed costs P500,000 (275.000) 225,000 (180,000) P 45,000 Operating income Sandra produces and sells a single product. The above income statement is based on sales of 100,000 units. Requirements: 1. Compute the breakeven point in units and in pesos. 2. Suppose that the selling price increases by 10 percent. Will the breakeven increase or decrease? 3. Suppose that the variable cost per unit increases by P0.35. What will happen to breakeven point? 4. Can you predict whether the breakeven increases or decreases if both the selling price and the unit variable cost increase? Recompute the breakeven point by incorporating both the changes in requirement 2 and 3. 5. Assume that total fixed costs increase by P50,000. Will the breakeven point change?
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 6PA: Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit...
Related questions
Question
100%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning