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PROBLEM 6. After its cost structure (variable costs P15 per unit and monthly fixed costs of P125,000),as well as potential market, Babaero Company established what it considered to b a reasonable selling price. The company expected to sell 20,000 units per month and planned its monthly results as follows: Sales @P25 Less: Variable costs @P15 P500,000 (300,000) 200,000 (125,000) 75,000 f 30,000) P 45,000 Contribution margin Less: Fixed costs Income before taxes Less: Income taxes Net income 7. If the company wants an after-tax profit of P60,000 on its expected sales volume of 20,000 units, what price must it charge? 8. The company is considering offering its salespeople a 5% commission on sales. What would the total sales, in pesos, have to be in order to implement the commission plan and still earn the planned before-tax income of P75,000? 9. If the company wants its before tax profit higher than the planned P75,000 by P15,000, compute the required increase in peso sales.

PROBLEM 6. After its cost structure (variable costs P15 per unit and monthly fixed costs of P125,000),as well as potential market, Babaero Company established what it considered to b a reasonable selling price. The company expected to sell 20,000 units per month and planned its monthly results as follows: Sales @P25 Less: Variable costs @P15 P500,000 (300,000) 200,000 (125,000) 75,000 f 30,000) P 45,000 Contribution margin Less: Fixed costs Income before taxes Less: Income taxes Net income 7. If the company wants an after-tax profit of P60,000 on its expected sales volume of 20,000 units, what price must it charge? 8. The company is considering offering its salespeople a 5% commission on sales. What would the total sales, in pesos, have to be in order to implement the commission plan and still earn the planned before-tax income of P75,000? 9. If the company wants its before tax profit higher than the planned P75,000 by P15,000, compute the required increase in peso sales.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PROBLEM 6. After its cost structure (variable costs P15 per unit and monthly fixed costs of P125,000),as well as potential market, Babaero Company established what it considered to b a reasonable selling price. The company expected to sell 20,000 units per month and planned its monthly results as follows: Sales @P25 Less: Variable costs @P15 Contribution margin P500,000 [300,000) 200,000 (125,000) 75,000 ( 30,000) P 45,000 Less: Fixed costs Income before taxes Less: Income taxes Net incom 7. If the company wants an after-tax profit of P60,000 on its expected sales volume of 20,000 units, what price must it charge? 8. The company is considering offering its salespeople a 5% commission on sales. What would the total sales, in pesos, have to be in order to implement the commission plan and still earn the planned before-tax income of P75,000? 9. If the company wants its before tax profit higher than the planned P75,000 by P15,000, compute the required increase in peso sales.
Transcribed Image Text:PROBLEM 6. After its cost structure (variable costs P15 per unit and monthly fixed costs of P125,000),as well as potential market, Babaero Company established what it considered to b a reasonable selling price. The company expected to sell 20,000 units per month and planned its monthly results as follows: Sales @P25 Less: Variable costs @P15 Contribution margin P500,000 [300,000) 200,000 (125,000) 75,000 ( 30,000) P 45,000 Less: Fixed costs Income before taxes Less: Income taxes Net incom 7. If the company wants an after-tax profit of P60,000 on its expected sales volume of 20,000 units, what price must it charge? 8. The company is considering offering its salespeople a 5% commission on sales. What would the total sales, in pesos, have to be in order to implement the commission plan and still earn the planned before-tax income of P75,000? 9. If the company wants its before tax profit higher than the planned P75,000 by P15,000, compute the required increase in peso sales.
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