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(1.) The Taylor Radio Company manufactures and sells ultrasonic radios at P650 each. The variable manufacturing costs per unit are: direct materials = P200, direct
(1.) The Taylor Radio Company manufactures and sells ultrasonic radios at P650 each. The variable manufacturing costs per unit are: direct materials = P200, direct labor = P150, FOH = P50, and selling & administrative expenses = P50. The fixed FOH is about P500,000 and fixed selling & administrative expenses P500,000. (a) What is the annual BEP in units and sales? (b) What profit will Taylor earn at 10,000 units? (c) How much will Taylor's profit increase/ decrease (compared to b) if there is a: (c1) 15% reduction in selling price, and (c2) 10% increase in direct labor cost? (d) Taylor anticipates sales of 15,000 units during the coming year, what would be the margin of safety? (e) What unit sales volume is necessary to earn P500,000
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