Case 5 Cost Structures and Average Costs (20 pts) At a coffee break during a corporate meeting of divisional managers, the following conversation took place: Sussy: "My division has enormous fixed costs, and volume is our critical problem. My cost per unit in now P 9, at 100,000 units, but if I could double production, cost per unit would drop to P 6. My selling price is also too low, only P10." Sam: "You are lucky! Even though our products are the same, my cost per unit is P9 at 200,000 units. Problem is, I can't produce any more than 200,000. At least I'm better off than when sales were 80,000 units. At that volume I lost P0.50 per unit at our P10 price. And you know, our selling prices do not change!'

Required: 1) Compute the profit earned of each division at its current level of sales.

2) Determine fixed costs, variable cost per unit, and contribution margin per unit per division.

3) Compute the break-even point for each division.

4) At what sales level would the divisions have same profit? Justify.