1. Mima Inc. reported the following results from sales of 5, 000 units of Product C for the month of June 2012: Sales P200, 000 Variable cost P120, 000 Fixed cost P60, 000 Operating income P20, 000

Assume that mima, Inc. increases the selling price of Product C by 10% on July 1, 2012. How many units of Product C would have to be sold in July 2012 in order to generate an operating income of P20, 000?

2. Mima Company contemplates the replacement of an old equipment. The annual cost of operating the old equipment is P500, 000 excluding depreciation, while the estimate for the new equipment is P350, 000. Cost of the new equipment is P400, 000 with a useful life estimate of 5 years and no salvage value. Assume an income tax rate of 30%, and a 10% cost of capital. The book value of the old machine is zero. Required: Payback period