1. Sunny Company sells its products for Php20.00 per unit. Variable costs amount to half the selling price. Fixed costs and interest expense amount to Php750,000 and Php50,000, respectively. The Company is subject to an income tax rate of 30%. What is the degree of total leverage if the company sold 100,000 units?

a. 1.25

b. 5.00

c. 4.00

d. None

2. Dainty Company is considering a change in its credit terms from n/30 to 4/10, n/30. The company's budgeted sales for the coming year are Php 48,000,000, of which 90% are expected to be made on credit. If the new credit terms are adopted, Dainty estimates that discounts will be taken on 40% of the credit sales; however, uncollectible accounts will be unchanged. The new credit terms will result in expected discounts taken in the coming year of

a. Php691,200

b. Php864,000

c. Php768,000

d. Php960,000

3. Captain Co. has an old credit policy generating sales of Php2,700,000 and an average period of 32 days. With a new credit policy, sales would amount to Php2,970,000 and an average collection period of 40 days.

The company requires a rate of return of 10% and a variable cost ratio of 70%. Using a 360-day year, the pre-tax cost of carrying the additional investment in receivables under the new policy would be

a. Php2,800

b. Php3,300

c. Php6,300

d. Php6,000

4. Paperoo Company has an average number of 40 days in collection. Its budgeted sales amounted to Php 25,000,000. Its ratio of credit sales amounted to 72%. Paperoo plans to tighten its credit policy. The average number of days in collection would reduce to 30 days and the ratio of credit sales to total sales is 60%. In addition, because of tightening of the policy, a 10% decrease in sales would occur. What is the effect new policy on accounts receivable? (assume a 360-day year)

a. No change

b. Decrease of Php875,000

c. Decrease of Php750,000

d. Decrease of Php1,125,000

5. Bee Company annually consumes 28,000 units of Part A. The carrying cost of this part is Php2.00 per year and the ordering costs are Php280.00. The company uses an order quantity of 1,400 units. By how much would the company reduce its total costs if it purchased the economic order quantity instead of 1,400 units?

a. Php700

b. Php2,100

c. Php1,400

d. Php2,800

6. Milan Company's financial plan for next year shows sales of Php4,800,000 and cost of sales of Php3,000,000. It expects short term interest rates to average 12% for the coming year It aims to increase inventory turnover form the present level of 10 times to 15 times next year If its plans and objectives would be carried out, how much is the cost savings for the coming year?

a. Php12,000

b. Php30,000

c. Php36,000

d. None of the choice