A company sells its product for Php25 per unit. The monthly fixed costs, made up of manufacturing, selling and administrative costs, amount to php 350,000. The variable cost amounts to 15.00 php per unit, made up of 6.00 php of administrative and sales cost and 9.00 php of manufacturing. The company expects to sell 40,000 product units in the coming months.

Required

1. Determine the company's projected operating income for the next month.
2. Determine the break-even point in units and in pesos.
3. Determine the margin of safety in pesos using the budgeted sales of 40,000 units.
4. 
   
5. Consider the changes in utility factors described in the independent case below.
6. a. The sale price will increase Php5.00 per unit;
7. b. The volume will drop 2000 units;
8. C. the variable cost per unit will increase by 10%;
9. d. The fixed cost will increase by php360,000;
10. e. the selling price will decrease by 20%, resulting in an 80% increase in volume;
11. F. The fixed cost will be reduced by Php50,000. This will reduce production and sales volume by 50%; and
12. g. Included in the variable selling and administrative cost of P6.00 is the sellers commission of P2.00 per unit. In the next month, these salespeople will be paid a fixed salary of P30,000 (full amount) instead of the commission of P2.00 per unit. This change in payment scheme is expected to decrease volume by 3,000 units.
13. 
    
14.  Determine the new profit figures, profit percentage, break-even point and margin of safety if said changes were affected. 

Answer rating: 100% (QA)

To determine the new profit figures profit percentage breakeven point and margin of safety we will calculate each of these elements based on the changes described in the independent case Original Info... View the full answer