Question
1.Ding Company makes a product that it sells for P200.Ding incurs annual fixed costs of P250,000 and variable costs of P160 per unit. (15 pts)
1.Ding Company makes a product that it sells for P200.Ding incurs annual fixed costs of P250,000 and variable costs of P160 per unit. (15 pts)
a.Suppose that Ding desires to earn a P50,000 profit.Determine the sales volume in units and pesos required to earn the desired profit.Confirm your answer by preparing an income statement using the contribution margin format.
b.If variable costs drop to P130 per unit, what level of sale sis required to earn the desired profit? Express your answer in units and pesos.
c.Assume that Ding concludes that it can sell 5,000 units of product for P180 each. Recall that variable costs are P130 each and fixed costs are P200,0000. Compute the margin of safety in units and pesos and as a percentage.
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