1. Easy Cook Company manufactures two products: toaster ovens and bread machines. The following data are available: Toaster ovens Selling Price (SP): P60; Variable Cost (VC): P38; Bread Machines SP: P135; VC: 62. Easy Cook can manufacture five toaster ovens per machine hour and three bread machines per machine hour. Easy Cook's production capacity is 1,500 machine hours per month. Marketing limitations indicate that Easy Cook can sell a maximum of 5,000 toasters a month, and 3,000 bread machines per month. To maximize profits, how many units of bread machines should be produced?*
2. Production of Product X has been budgeted at 200,000 units for May. One unit of X requires 2 lbs. of raw material. The projected beginning and ending materials inventory for May: Beginning inventory: 2,000 lbs.Ending inventory: 10,000 lbs. How many lbs. of material should be purchased during May?*
3. During the last year, Hansen Company had net income under absorption costing that was P5,500 lower than its income under variable costing. The company sold 9,000 units during the year, and its variable costs were P10 per unit, of which P6 was variable selling expense. If fixed production cost is P5 per unit under absorption costing every year, then how many units did the company produce during the year?*
4. Last year, fixed manufacturing overhead was P30,000, variable production costs were P48,000, fixed selling and administration costs were P20,000, and variable selling administrative expenses were P9,600. There was no beginning inventory. During the year, 3,000 units were produced and 2,400 units were sold at a price of P40 per unit. Under variable costing, net income would be:*
5. Rams Corporation sells two types of computer chips. The sales mix is 30% (Q-Chip) and 70% (Q-Chip Plus). Q-Chip has variable costs per unit of P60 and a selling price of P100. Q-Chip Plus has variable costs per unit of P70 and a selling price of P130. Rams' fixed costs are P540,000. How many units of Q-Chip would be sold at the break-even point?*
6. In 2019, Arrow sold 3,000 units at P500 each. Variable expenses were P250 per unit, and fixed expenses were P250,000. The same selling price is expected for 2020. Arrow is tentatively planning to invest in equipment that would increase fixed costs by 20%, while decreasing variable costs per unit by 20%. What is Arrow's break-even point in units for 2020?*
7. Pouch Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.84 direct labor-hours. The direct labor rate is P9.40 per direct labor-hour. The production budget calls for producing 2,100 units in June and 1,900 units in July. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months?*
8. Wowowie is a large securities dealer. Last year, the company made 120,000 trades with an average commission of P120. Because of the general economic climate, Wowowie expects trade volume to decline by 20%. Fortunately, the average commission per trade is likely to increase by 10% because trades are expected to be large in the coming year. What are the estimated commission's revenues for Wowowie in the coming year?*
9. Dorcan Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for P7.50 each, and the variable cost to manufacture them was P2.25 per unit. The company needed to sell 20,000 shirts to break-even. The after tax net income last year was P5,040. Dorcan's expectations for the coming year include the following: The sales price of the T-shirts will be P10. Variable cost to manufacture will increase by one-third. Fixed costs will increase by 10%. The income tax rate of 40% will be unchanged. Based on a P10 selling price per unit, the number of T-shirts Dorcan Corporation must sell to break-even in the coming year is:*
10. A local vendor at the county fair sells snow cones for P 0.50 each. When 250 snow cones are sold, each snow cone is estimated to have P 0.10 in variable costs and P.15 in fixed costs. A local school group plans on attending the fair next week and wishes to purchase 50 snowcones for P 0.25 each. The vendor can sell as many as 400 snowcones per day. What is the minimum price the vendor should charge for the snowcones?*
11. Trevor Company expects sales of Product W to be 60,000 units in April, 75,000 units in May, and 70,000 units in June. The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales. Due to excessive production during March, on March 31 there were 25,000 units of Product W in the ending inventory. Given this information, Trevor Company's production of Product W for the month of April should be:*
12. Banko Products produces and sells padded stadium seats emblazoned with a university logo. The company has the capacity to produce as many as 6,000 seats per month but consistently averages much less. When 4,500 seats are produced, each seat has P5 of variable costs and P2 of fixed overhead costs allocated to it. The seats typically sell for P12 each. The company has been approached by a small college who wishes to purchase 500 seats for special alumni at a price of P5 per seat.*