P5-4. CVP Relationships. The financial report submitted by Mins _copy Santiago, chief accountant of RPI Enterprises, included the following date among others: Sales 30,000 units Variable cost . .............. .P 6 per unit Break-even sales ratio . ....... 75% Profit ratio . ............. 10% Upon reading the report, the company's president, Mr. Diony dela Cruz, commented that the results of operations can be improved if the company will increase its selling price. To justify this increase in selling price, slight modifications will be done in the design of the product. According to him, the product's design can be modified if the company will use a modern equipment that is now available in the local market. Naturally, acquisition of this modern equipment will mean additional coats for the company, but Mr. dela Cruz is optimistic that the increase in sales due to the increase in selling price will more than cover the incremental cost. When Miss Santiago made an analysis of Mr. dela Cruz' plan, her study revealed the following: . The increase in selling price will increase the contribution margin ratio to 50%. . The only change in cost that will result from the acquisition of a modern equipment is an increase in fixed manufacturing overhead. * Break-even sales will go up by P27,000. Required: Determine the following, assuming that RPI Enterprises will implement Mr. dela Cruz' proposal: Increase in total sales b. Increase in Fixed cost C. Expected increase in profitP8-1. Service Make-Buy Decision. Electrolacks Company is planning to provide its sales staff of 50 persons a training program on personality development. It is considering two alternatives for this project. One is to use its own personnel to develop the materials and conduct the seminar. Another is to avail the services of a consulting firm to develop the materials and teach the course. The two alternatives are expected to provide training of equal quality to the sales staff. The costs involved under the two alternatives are presented below: Tuition-consulting firm P300 per person Cost of training materials 200 per person Salary of sales staff while in class 150 per person For convenience, the Electrolacks wants to hold the seminars in the company's conference room, which it depreciates at the rate of P2,000 pel month. Meals and snacks are to be served during the seminar. These will be shouldered by the company at an estimated cost of P200 per person. Required: Which alternative should be chosen by Electrolacks Company