Twenty Twenty One Corp. Income Statement For the month ended December 31, 2020 Sales (P10/unit) ...................................................................................................... P900,000 Variable Costs: Variable Cost of Goods Sold: Beginning Inventory ............................................................. P125,000 Variable Cost of Goods Manufactured ............................... 400,000 ---------------- Total Goods Available for Sale ........................................... 525,000 Ending Inventory ................................................................. 75,000 ---------------- Variable Cost of Goods Sold .............................................. 450,000 Variable Selling Expense ....................................................... 90,000 540,000 ----------------- ------------------- Contribution Margin ................................................................................................ P360,000 Fixed Costs: Manufacturing ................................................................... P240,000 Selling and Administrative ................................................ 90,000 330,000 ------------------ ------------------ Operating Profit ..................................................................................................... P30,000 ========== During December 2020, the entity manufactured a total of 80,000 units 1.How many units should be sold for the company to break even? 2.Assuming a tax rate of 25%, how much sales is needed to generate an after-tax profit of P90,000? 3.What percentage of current sales can the company afford to lose before incurring any losses?
Twenty Twenty One Corp.
Income Statement
For the month ended December 31, 2020
Sales (P10/unit) ...................................................................................................... P900,000
Variable Costs:
Variable Cost of Goods Sold:
Beginning Inventory ............................................................. P125,000
Variable Cost of Goods Manufactured ............................... 400,000
----------------
Total Goods Available for Sale ........................................... 525,000
Ending Inventory ................................................................. 75,000
----------------
Variable Cost of Goods Sold .............................................. 450,000
Variable Selling Expense ....................................................... 90,000 540,000
----------------- -------------------
Contribution Margin ................................................................................................ P360,000
Fixed Costs:
Manufacturing ................................................................... P240,000
Selling and Administrative ................................................ 90,000 330,000
------------------ ------------------
Operating Profit ..................................................................................................... P30,000
==========
During December 2020, the entity manufactured a total of 80,000 units
1.How many units should be sold for the company to break even?
2.Assuming a tax rate of 25%, how much sales is needed to generate an after-tax profit of P90,000?
3.What percentage of current sales can the company afford to lose before incurring any losses?
4.Assuming the entity raises its unit sales by 15%, how much would be the expected increase in the profit before tax?
5.Assuming that there was a proposal to increase fixed selling costs by P50,000, which would increase sales by 20%, how much would be the expected increase in the before-tax profit?
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