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Problem 1: Candyman Company is a wholesale distributor of candy. The company services grocery stores, convenience stores, and drug stores in Metro Manila. Small but steady growth in sales has been achieved by the company over the past few years while candy prices have been increasing. The company is preparing its plans for the coming fiscal year. Presented below are the data used to project the current year's after-tax net income of P1, 104,000. Manufacturers of candy have announced that they will increase prices of their products at an average of 15% in the coming year due to increases in raw materials (sugar, cocoa, peanuts, etc.) and labor costs. Candyman Company expects that all other costs will remain at the same rates or levels as the current year. Candyman is subject to a 30% income tax rate. Average selling price P40 per box Average variable costs Cost of candy P20 per box Selling expenses P4 per box Annual fixed costs Selling expenses P1,690,000 Administrative P2,800,000 Expected annual sales volume 390,000 boxes P15,600,000 Required: 1. What is the break-even point in units before a 15% increase in prices? 2. If the current contribution margin ratio is maintained, what would be the selling price of the candy to cover the 15% increase in variable costs? 3. If candy costs increase 15% but the selling price remains at P40 per box, what will be the breakeven point in units? 4. If the candy costs remain constant but the selling price increases by 15%, what will be the breakeven point in peso sales? 5. If net income after taxes is to remain the same after the cost of candy increases but no increase in the sales price is made, how many boxes of candy must Candyman sell?JJ Company produces a variety of products. The company's project income statement for the coming year is: Sales (218,000 units @ P60) P13,080,000 Total variable costs 7.630.000 Contribution margin 5.450,000 Total fixed costs 4.250.000 Operating income P 1,200,000 Required: 1. Compute the contribution margin per unit, and calculate the break-even point in units. 2. The management has decided to increase the advertising budget by P250,000. This will increase sales revenues by P1,000,000. By how much will operating income increase or decrease as a result of this action? 3. Suppose sales revenues exceed the estimated amount on the income statement by | P1,500,000. Prepare a new income statement and determine the amount of understatement of net income. 4. Compute the margin of safety based on the original income statement. 5. Compute the degree of operating leverage based on the original income statement. If sales revenues are 8% greater than expected, what is the percentage increase in operating income