Auditing problems

For numbers 26-30, refer to the following information: Bolton Company's income statement for last month is given below: Sales (15,000 units @ P 30) P 450,000.00 Less: Variable Expenses 315,000.00 Contribution Margin 135,000.00 Less: Fixed Expenses 90,000.00 Net Income 45,000.00 The industry in which Bolton Company operations is quite sensitive to cyclical movements in the economy. Thus, profits vary considerably from year to year according to general economic conditions. The company has a large amount of unused capacity and is studying ways of improving profits. A new equipment has come onto the market that would allow Bolton Company to automate a portion of its operations. Variable costs would be reduced by P 9 per unit. However, fixed 26 How much income for the month would the company earn if the new equipment is purchased? A P45,000 B P30,000 C P60,000 D P75,000 27 How many units are required as increase or decrease in breakeven point if the new equipment is purchased? A 0 B 2,500 units C 3,200 units D 4,000 units 28 The degree of operating leverage during the month where the new equipment is used is A 3.0 times B 4.5 times C 6.0 times D 9.0 times 29 Refer to the original data. Rather than purchase a new equipment, the president is thinking about changing the company's marketing method. Under the new method, sales would increase by 20% each month and net income would increase by one-third. Fixed costs could be slashed to only P 48,000 per month. Compute the break-even point for the company after the change in marketing method. A 8,000 units B 12,500 units C 9,000 units D 10,000 units 30 Assuming that during the month after the new equipment has been started in use, the sales increase by 4,500 units. The variable expenses per unit and the monthly fixed d affected by the acquisition of the new equipment occurred as expected. What is the e profit of the company for that month