A certain firm has the capacity to produce 700,000 units of product per year. At present,...

 

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A certain firm has the capacity to produce 700,000 units of product per year. At present, it is operating at 75% of capacity. The firm's annual revenue is PHP85,000,000. Annual fixed costs are PHP20,000,000 and the variable cost is PHP90 per unit of product. a) What is the firm's annual profit or loss? b) At what volume of sales does the firm breakeven? c) What will be the profit or loss at 100% of capacity on the basis of constant income per unit and constant variable cost per unit? d) If the selling price is lowered by 25% per unit, how many units must be sold each year for the company to earn a profit of PHP1,000,000 per year? A certain firm has the capacity to produce 700,000 units of product per year. At present, it is operating at 75% of capacity. The firm's annual revenue is PHP85,000,000. Annual fixed costs are PHP20,000,000 and the variable cost is PHP90 per unit of product. a) What is the firm's annual profit or loss? b) At what volume of sales does the firm breakeven? c) What will be the profit or loss at 100% of capacity on the basis of constant income per unit and constant variable cost per unit? d) If the selling price is lowered by 25% per unit, how many units must be sold each year for the company to earn a profit of PHP1,000,000 per year?

Answer rating: 100% (QA)

1 Contribution Revenue variable cost 85000000 7000007590 377... View the full answer