- answer the following with solution
ales would increase by P 10,0002 Problem 16 (Degree of Operating Leverage): Mindoro Corporation currently has an operating leverage of 4, sales is expected to increase by 12.5% in the following year. The annual fixed cost amounted to P 100,000. Required: 1. What is the expected operating income in the following year? 2. What is the expected degree of operating leverage in the following year? Problem 17 (Multi-Product): Ilocos Corporation has the following information about its two products and its operation: Product Selling Price P10 P20 Variable Cost Units Sold 10,000 30,000 Total Fixed Costs P 90,000 Required: 1. What is the weighted average contribution margin per unit? 2. How many units of each product must the company be able to sell to break even? 3. How many units of each product must the company be able to sell to earn a target profit of P45,000? If the Product A's variable cost per unit will increased by P2.00, how much should 4 . product B's variable cost be to maintain the same level of break-even sales? Problem 18 (Multi-Product): Zamboanga Corporation's current segmented contribution format3. oak even? of P45,000? How many units of each product must the company be able to sell to earn a target profit 4. If the Product A's variable cost per unit will increased by P2.00, how much should product B's variable cost be to maintain the same level of break-even sales? Problem 18 (Multi-Product): Zamboanga Corporation's current segmented contribution format income statement follows: X Y Total Sales P 150,000 P 600,000 P 750,000 Variable Costs 60,000 450,000 510,000 Contribution Margin 90,000 150,000 240,000 Fixed Costs* 40,000 160,000 200,000 Net Income 50,000 (10,000) 40,000 Required: (*Fixed costs are allocated based on the product's total sales.) 1. What is the weighted average contribution margin ratio? 2. How much is the total sales of each product at break-even point? 3. How much is the total sales of each product if the company's target profit is P60,000? 22 | Chapter 5: Cost - Volume - Profit Analysis3. If the company is subject to a 40% tax return and would like to earn an after-tax return on sale of 9%, what should be its total sales? Problem 11: Target Profit (Adapted_RP-CPA) Ipil-ipil Corp. would like to market a new product at a selling price of P15 per unit. Fixed costs for this product are P1,000,000 for less than 500,000 units of output and P1,500,000 for 500,000 or more units of output. The contribution margin percentage is 20%. Required: How many units of this product must be sold under the following target operating income: 1. P 500,000 2. P1,000,000 3. P 2,000,000 Problem 12 (Margin of Safety): Mindoro Corporation had sales of P 120,000 for the month of May. It has a margin of safety ratio of 25%, and after tax return on sales of 6%. The company assumes that Sales is constant every month. Required: 1. If the tax rate is 40%, how much is the annual fixed costs? 2. What is the company's contribution margin ratio? Problem 13 (Margin of Safety): A company has the following limited data for the current year: Total Variable Cost at BEP P 30,000 Margin of Safety 37.5% Contribution Margin Ratio 40% Required: 1. How much is the Company's current year total sales? 2. How much is the Company's current year total variable cost? 3. How much is the current year's net income? Problem 14 (Degree of Operating Leverage): At the current sales volume of P 400,000, Davao Corporation return on sales is 10%. It is expected that in the coming year, a P 600,000 sales volume will be attained by the company and will have a return on sales of 20%. Required: 1. What was the Davao Corporation's current degree of operating leverage? 2. What was the company's fixed cost? 3. What is the break-even point in peso sales? Problem 15 (Degree of Operating Leverage): The following information pertains to Jan Corp. Operating Leverage 4 Fixed Costs P 30,000 Current Year Total Peso Sale P 125,000 Required: 21 | Chapter 5 : Cost - Volume - Profit Analysis
