Racine Tire Co. manufactures tires for all-terrain bicycles, The tires sell for P60 and variable cost per tire is P45; monthly fixed cost is P450,000. Requirement: 1. Calculate the firm's break-even point in sales pesos

Racine Tire Co. manufactures tires for all-terrain bicycles, The tires sell for P60 and variable cost per tire is P45; monthly fixed cost is P450,000. Requirement: 1. Calculate the firm's break-even point in sales pesos

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.2IP

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Question

Racine Tire Co. manufactures tires for all-terrain bicycles, The tires sell for P60 and variable cost per tire is P45; monthly fixed cost is P450,000.

Requirement:

1. Calculate the firm's break-even point in sales pesos

2. What will be the new net income?

3. If the company can increase sales volume by 15 percent above the current level, 8,400,000 tires monthly What will be the increase in net income?

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