EXERCISE 1: TOTAL ANALYSIS VS DIFFERENTIAL ANALYSIS ABC company has a single product called Logi. The company currently sells 10,000 units of Logi at P40 per unit. The company's costs at this level of activity are given below: Variable costs: REQUIRED: Direct Materials P10 Direct Labor P 8 Variable overhead P 5 Variable Selling expenses P 2 Fixed costs Fixed overhead P50,000 Fixed selling expense P30,000 1. What is ABC company's present profit? 2. ABC company could increase its sales by 20% if it spends P20,000 for advertisements. Determine the effect on a company's profit. EXERCISE 2: MAKE OR BUY ABC motors must decide whether it must continue to produce an engine component or buy it from Baguio for P2,500 each. The demand for the coming year is 20 units. The costs of producing a single unit of the engine component are as follows: Direct materials P1,300 Direct labor 700 Factory overhead(80% fixed) 1,000 If ABC buys the component, the facility now used to make the component can be rented out to another firm for P4,000. Should ABC make or buy the component?