0 Cost of Production in the Short-run. SHOW FORMULA IN EXCEL Price of Labor (L) is PHP 100 while Price of Capital (K) is PhP 50. What is the best cost-minimizing combination of K and L? Total Price of Price of Total Fixed Ave Ave Ave TP aka Q Marginal Variable Total Cost Fixed Variable Total Capital (K) Labor (L) Cost Cost Cost Cost Cost Cost 10 0 10 1 14 10 2 35 3 62 10 4 91 5 121 10 6 150 10 7 175 10 197 212 10 217 10 10 8 10 9 10 EXERCISE 6-16 Working with a Segmented Income Statement Break-Even Analysis 106-4. L06-5 Rane Hum Clun is coming firm that specializes in information systems for medical and dental clinic. The firm has twoffices coe in Chice and one in Minneapolis. The firm canities the direct costs of consultinut jobs as variable coses. A contribution format gente come went for the company's most recent yeat is given Office Sales Variable expenses Contribution margin Thefted expenses Total Company Chicago Minneapolis 5450.000 1001 $150,000 to $300,000 225.000 505 45,000 10% 100,000 225.000 50 105.000 70% 120.000 40% 126.000 219 2.000 320 48.000 163 99,000 225 527000 72.000 245 61000145 Office menta Commen fred expenses not traceable to offices Net operating Incorso $35.000 Required: 1. Compute the company wide break even point in dollar sales. Also, compute the break even point for the Chicago office and for the Minneapolis office. Is the company wide beleven pointer that is than or equal to the sum of the Chicago and Minneapolis teen points? Why? 2. By how much would the company's net operating income increase ir Minneapolis increased its sale by $75,000 per yeart Awume do change in cost behavior patterns 3. Refer to the original data. Asume that sales in Chicago increase by $50,000 next year and that aber in Minneapolis remain unchanged. As no change in fed costs Para ewented income statement for the company using the above forma Show both amounts and percent Observe from the income statement you have prepared that the contribution margin ratio for Chicago has remained unchanged at 706 the same in the above data) but that the same margin ratio has changed. How do you explain the change in the mentari 0 Cost of Production in the Short-run. SHOW FORMULA IN EXCEL Price of Labor (L) is PHP 100 while Price of Capital (K) is PhP 50. What is the best cost-minimizing combination of K and L? Total Price of Price of Total Fixed Ave Ave Ave TP aka Q Marginal Variable Total Cost Fixed Variable Total Capital (K) Labor (L) Cost Cost Cost Cost Cost Cost 10 0 10 1 14 10 2 35 3 62 10 4 91 5 121 10 6 150 10 7 175 10 197 212 10 217 10 10 8 10 9 10 EXERCISE 6-16 Working with a Segmented Income Statement Break-Even Analysis 106-4. L06-5 Rane Hum Clun is coming firm that specializes in information systems for medical and dental clinic. The firm has twoffices coe in Chice and one in Minneapolis. The firm canities the direct costs of consultinut jobs as variable coses. A contribution format gente come went for the company's most recent yeat is given Office Sales Variable expenses Contribution margin Thefted expenses Total Company Chicago Minneapolis 5450.000 1001 $150,000 to $300,000 225.000 505 45,000 10% 100,000 225.000 50 105.000 70% 120.000 40% 126.000 219 2.000 320 48.000 163 99,000 225 527000 72.000 245 61000145 Office menta Commen fred expenses not traceable to offices Net operating Incorso $35.000 Required: 1. Compute the company wide break even point in dollar sales. Also, compute the break even point for the Chicago office and for the Minneapolis office. Is the company wide beleven pointer that is than or equal to the sum of the Chicago and Minneapolis teen points? Why? 2. By how much would the company's net operating income increase ir Minneapolis increased its sale by $75,000 per yeart Awume do change in cost behavior patterns 3. Refer to the original data. Asume that sales in Chicago increase by $50,000 next year and that aber in Minneapolis remain unchanged. As no change in fed costs Para ewented income statement for the company using the above forma Show both amounts and percent Observe from the income statement you have prepared that the contribution margin ratio for Chicago has remained unchanged at 706 the same in the above data) but that the same margin ratio has changed. How do you explain the change in the mentari