Please answer with a complete solution. Will definitely upvote.

Question No. 1. The Accountant of Thunder Corporation estimates that the variable cost per product unit will increase from P80 to P95. The selling price is expected to remain at P120. The fixed costs for the year amount to P340,000. Last year, the company sold 30,000 units of products and expects to sell the same quantity this year. Guerrero is concerned about the loss in profitability because of increased costs. He asks you to prepare an evaluation of what changes are taking place.

Required:

a. What is the contribution margin ratio for this year and last year?

b. What is the break-even point in sales pesos for this year and last year?

c. Calculate the margin of safety for last year and this year.

d. Compute the operating leverage for this year and last year.

e. Explain what would happen to profits this year if the sales volume could be increased by 15%.

Question No. 2. Lightning Company produces two products: squares and circles. The projected income for the coming year, segmented by product line, follows:

Squares Circles Total

Sales P300,000 P2,500,000 P2,800,000

Less: Variable expenses 100,000 500,000 600,000

Contribution margin P200,000 P2,000,000 P2,200,000

Less: Direct fixed expenses 28,000 1,500,000 1,528,000

= Product margin P172,000 P 500,000 P672,000

Less: Common fixed expenses 100,000

=Operating income P572,000

The selling prices are P30 for squares and P50 for circles.

Required:

1. Compute the number of units of each product that must be sold for Gosnell Company to break even.
2. Compute the revenue that must be earned to produce an operating income of 10 percent of sales revenues.
3. Assume that the marketing manager changes the sales mix of the two products so that the ratio is three squares to five circles. Repeat Requirements 1 and 2.
4. Refer to the original data. Suppose that Gosnell can increase the sales of squares with increased advertising. The extra advertising would cost an additional P45,000, and some of the potential purchasers of circles would switch to squares. In total, sales of squares would increase by 15,000 units, and sales of circles would decrease by 5,000 units. Would Gosnell be better off with this strategy?