1. Merchandiser, Inc. sells Product O to retailers for P200. The unit variable cost is P40 with a selling commission of 10%. Fixed manufacturing costs total P1,000,000 while fixed selling and administrative costs total P420,000. The income tax rate is 30%.

Required: Compute for the target sales considering the following:
a. The target earnings before income tax is P480,000.
b. The target income after tax is P224,000.
c. The target earnings before income tax is 20% of sales.

 

2. Pangasinan Corporation manufactures and sells two products - Bangus and Tupig. Current revenues, costs and sales data on the two products appear below.
                                                                       Bangus               Tupig
Selling price per unit                                      P400                   P600
Variable costs per unit                                      240                    120
Number of units sold monthly                     200 units         300 units

Fixed costs and expenses are P704,000 per month.

Required: Compute for the following
a. Average unit contribution margin ratio.
b. Composite (or total) breakeven point in units and in pesos.
c. Breakeven units per product.

Answer rating: 100% (QA)

1 Target Sales a Target Earnings before Income Tax is P480000 Lets denote the target sales as TS Earnings before Income Tax Target Sales Revenue Total ... View the full answer