operates With sun energy . The product would Incur a total variable Cost Of P16 per unit to manufacture and sell. The plant has a capacity of 20,000 units per month at P180,000 fixed costs and expenses, excluding its monthly interest charges of P45,000. This product has a contribution margin of 55%. At present the plant is operating at 80% of its capacity. Management plans to increase its current sales by 20% next year. a) At present operation, what is the operating leverage? b) What is the percentage increase in profit if current sales will increase by 20% next year? c) What is the break-even point in units? Babes Corp. Projects operating income of P4.0 million next year. The firm income tax rate is 30%. Babes presently has 750,000 shares of common stock which have a market value of P10 per share, no preferred stock and no debt. The firm is considering two alternatives to finance a new product: a) the issuance of P6.0 million of 10% bonds, or b) the issuance of 60,000 additional new shares of common stock. a) What will be the projected EPS next year if new common shares will be issued. b) What will be the projected EPS next year if 10% bonds will be issued c) What will be the firm's ROE next year if the firm issues new common stock. Minapass Mig. is involved in the production of machine parts. The company uses 500,000 pounds of steel annually. The current purchasing cost for steel is P2.20 per pound. The carrying cost for inventory is 20% of the purchase price. The cost of ordering steel is P1,000 per order. The company has decided to maintain a safety stock of 20,000 pounds. Delivery time per order is 10 days. The company works 365 days a year. a) Determine the optimal EOQ b) How many orders will placed annually