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60% 146, 00 40% Problem 4/Comprehensive Exercise): Baguio, Inc. produces only one product, berry baskets, low, 40% of which it sells for P72 each. Unit variable costs are P32 and total fixed expenses are P15,000. Actual sales for the month of June totaled 2,000 units. Required: 1. How much is the current operating income of the company? 2. Compute the break-even point in peso and in units 3. To attain an after tax profit of P 40,000 with a tax rate of 20%, the number of units to be sold will be? 4. Compute the margin of safety in units and peso for the company for June. of total sales af 5 . Compute the degree of operating leverage for the month of June. i will be enoug 6. If the company is expecting for units sale to increase by 20% in July, what is the expected over fixed cost. operating income? loss will be as Problem 5 (Break-Even Point): Based on the potential sales of 1,000 units per year, a new product has an estimated total cost at the said sales level of P 600,000, of which 60% are variable costs. Required: 00 units 1. What should be the price of the product in order to have a 25% return on sales? 00,000 2. At the selling price determined in the previous item, what would be the break-even point ,000) of the new product? 000 00) Problem 6 (Break-Even Point): The Mandaluyong Company needs a machine with the capacity to produce 200,000 units of a particular product. Two equipment suppliers have submitted bids. Machine 1 will generate P 100,000 fixed cost per year, but if the capacity of 200,000 units is reached profit for this product will amount to P 60,000. Machine 2 will have a fixed cost of only P 60,000 per year and will yield a profit of P 40,000 at 200,000 units. The product is priced at P2 per unit. Required: 1. Determine the break-even point for each machine in sales pesos. 2. Determine the sales volume at which the two machine produce equals profits. 3. Determine the range in sales pesos in which 19 | Chapter 5 : Cost - Volume - Profit Analysis