The company has P3,000,000 sales.  The variable costs are equal to fifty cents for every peso of sales. The fixed costs are estimated to be P100,000. The company has P1,000,000 debt outstanding at a before-tax cost of 10%.  How much of a percentage increase would you expect in the company's net income if their sales were to increase by 20%? A. 18.33% B. 19.24% C. 21.50% D. 23.08%

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 9E: Gelbart Company manufactures gas grills. Fixed costs amount to 16,335,000 per year. Variable costs...
icon
Related questions
Question

The company has P3,000,000 sales.  The variable costs are equal to fifty cents for every peso of sales. The fixed costs are estimated to be P100,000. The company has P1,000,000 debt outstanding at a before-tax cost of 10%.  How much of a percentage increase would you expect in the company's net income if their sales were to increase by 20%?

A. 18.33%

B. 19.24%

C. 21.50%

D. 23.08%

Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Similar questions
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
EBK CFIN
EBK CFIN
Finance
ISBN:
9781337671743
Author:
BESLEY
Publisher:
CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT