Alpha Frontier Inc. introduced a product ten years ago. The product's patent has now expired and...

Transcribed Image Text:

Alpha Frontier Inc. introduced a product ten years ago. The product's patent has now expired and Alpha expects a significant increase in suppliers for this product. Alpha originally sold the products at P1,500 each but competitors will likely sell it at P1,450. Last year, Alpha had actual and budgeted cost per unit of P806.67 and P783.33 respectively. If Alpha wants to maintain the profit per unit earned last year, how much should the decrease in the budgeted cost per unit be for the coming year? Total Costs Units Sold Cost per unit Budgeted 1,175,000 1,500.00 P 783.33 P Last Year -Actual 1,210,000 1,500.00 806.67 Theta Metalwork Inc. entered into an exclusive contract with an entity involved in franchising out artisanal candy stores. It will be producing a new design for a metal commercial rack based on the latter's needs. The latter is negotiating for a fixed-price on- demand ordering of the racks over five years. Theta gathered the following data shown in the image. How much should Theta sell each rack so that it can have a product profit margin of 28%? FIXED COSTS Year 1 Research and Design p 200,000 P Year 2 30,000 P Year 3 Year 4 Year 5 TOTALS - P P p 230,000 Manufacturing 50,000 50,000 50,000 50,000 50,000 250,000 Distribution 20,000 20,000 20,000 20,000 20,000 100,000 Customer Service 80,000 50,000 30,000 30,000 20,000 210,000 Other incremental operating costs 25,000 25,000 25,000 25,000 25,000 125,000 TOTALS P 375,000 P 175,000 P 125,000 P 125,000 P 115,000 P 915,000 VARIABLE COSTS PER UNIT Manufacturing Distribution Customer Service TOTALS UNITS TO BE SOLD AND PRODUCED P 500 P 450 P 450 P 450 P 450 100 100 100 100 100 50 50 50 50 50 P 650 P 600 P 600 P 600 P 600 300 800 850 900 400 3,250 Alpha Frontier Inc. introduced a product ten years ago. The product's patent has now expired and Alpha expects a significant increase in suppliers for this product. Alpha originally sold the products at P1,500 each but competitors will likely sell it at P1,450. Last year, Alpha had actual and budgeted cost per unit of P806.67 and P783.33 respectively. If Alpha wants to maintain the profit per unit earned last year, how much should the decrease in the budgeted cost per unit be for the coming year? Total Costs Units Sold Cost per unit Budgeted 1,175,000 1,500.00 P 783.33 P Last Year -Actual 1,210,000 1,500.00 806.67 Theta Metalwork Inc. entered into an exclusive contract with an entity involved in franchising out artisanal candy stores. It will be producing a new design for a metal commercial rack based on the latter's needs. The latter is negotiating for a fixed-price on- demand ordering of the racks over five years. Theta gathered the following data shown in the image. How much should Theta sell each rack so that it can have a product profit margin of 28%? FIXED COSTS Year 1 Research and Design p 200,000 P Year 2 30,000 P Year 3 Year 4 Year 5 TOTALS - P P p 230,000 Manufacturing 50,000 50,000 50,000 50,000 50,000 250,000 Distribution 20,000 20,000 20,000 20,000 20,000 100,000 Customer Service 80,000 50,000 30,000 30,000 20,000 210,000 Other incremental operating costs 25,000 25,000 25,000 25,000 25,000 125,000 TOTALS P 375,000 P 175,000 P 125,000 P 125,000 P 115,000 P 915,000 VARIABLE COSTS PER UNIT Manufacturing Distribution Customer Service TOTALS UNITS TO BE SOLD AND PRODUCED P 500 P 450 P 450 P 450 P 450 100 100 100 100 100 50 50 50 50 50 P 650 P 600 P 600 P 600 P 600 300 800 850 900 400 3,250