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J&J Music Builders is a new business in the industry. Currently, they are producing and selling bamboo organs and flutes. They are planning to add

J&J Music Builders is a new business in the industry. Currently, they are producing and selling bamboo organs and flutes. They are planning to add guitar to their instruments. Based on the study conducted, the following are cost 

data related to the creation of conventional and electric guitars:

 

Conventional Electric

Direct Materials P1,200 / unit P1,800 per unit

Direct Labor P1,800 / unit P450 / unit

Fixed Factory Overhead 16,000 47,970

Variable Factory Overhead 240 / unit 720 / unit

Variable Selling Expense 80 / unit 120 / unit

Compute for the number of guitar sales which would give J&J the same operating income when they choose either of the alternative presented above.

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