A chemical manufacturing company is producing 2,000 metric tons of products annually at full plant capacity and selling it for P1.60 per kilogram. The ratio of annual income from sales to the total cost of production is 1.2:1.0 while fixed cost is 35% of the variable cost. The ratio of labor cost to raw material cost is 1:3. Labor cost and raw material costs comprise 80% of the total variable cost, determine:

a. Net profit if all 80% of the manufactured product will be sold. The profit tax rate is 34%

b. The present break-even point in number of kilograms

If the management proposes increasing the selling price by 10% due to 20% increase in the cost of its raw materials and 15% increase in the cost of labor, determine

a. The expected gross profit if the plant will operate at its full plant capacity b. The new break-even point in number of kilograms

If the annual cost of depreciation (based on total cost of process equipment) using Sinking Fund Method (i = 15% amounts to 80% of the Fixed Cost (F). The service life of process equipment is 10 years while the salvage value is estimated at 10% of the original cost of equipment, determine:

a. The original cost of the process equipment
b. The book value of the process equipment at year 5. If Declining Balance Method of Depreciation will be used, the total accumulated depreciation at year 7.

Answer rating: 100% (QA)

Full capacity per annum 2000 mt Selling price per kg 16 Per unit Sale 12 160 Cost 10 133 Total cost ... View the full answer