PE 1. Use the following economic data to answer the numbered questions: Total fixed costs Unit selling price Unit variable cost P1.8M P80.00 P56.00 Indicate the effect on the following by one unit increase in sales volume: 1. Breakeven units 2. Total peso sales 3. Total contribution margin 4. Operating profit 5. Total costs PE 2. Baler Company has annual sales of P2.5M with variable expenses of 60 percent of sales and fixed expenses per month of P50,000. By how much will annual sales have to increase for Baler Company to have before-tax profit of 30 percent of sales revenue? PE 3. One of the products produced by Kool Company is Tanglad Tea. The selling price per 18-ml. bottle is P4.50, and variable cost of production is P2.70. Total fixed costs per year are P315,000. The company is currently selling 200,000 18- ml. bottle per year. 123 What is the margin of safety? 2. What is degree of operating leverage? 3. 4. If Kool Company can increase sales in units by 30 percent, what percentage increase will it experience in income? If the company increases advertising by P41,200, sales in units will increase by 15%. What will be the new breakeven point? PE 4. Maharlika Company manufacture two products, Alpha and Beta. Fixed costs equal P146,000. Product Alpha sells for P12 and has variable cost of P6. Product Beta sells for P8 and has variable costs of P5. 1. If Maharlika sells 20,000 units of Alpha and 40,000 units of Beta, what is the net income? 2. Assuming the sales given in Question number 1, how many units of Alpha and Beta to breakeven? 3. Assume Maharlika has the opportunity to rearrange its plant to produce only Product Beta. If this is done, fixed cost will decrease by P35,000, and 70,000 units of Product Beta can be produced and sold. Compute the effect of this change on profit. PE 5. Compute the answers to each of the following independent situations: 1. ARC Company has fixed costs of P125,000. At the breakeven point, 100,000 units are sold. If variable costs are P2.68 per unit, what is the price? 2. Johnson Company has a breakeven point of 4,800 units. At breakeven, variable costs are P480,000 and fixed costs are 720,000. What is the total revenue? 3. Boo Company's current sales volume is 7,200 units with selling price of P15 per unit. The company has total fixed costs of P720,000 within a range of 2,500 to 7,500. At breakeven point, how much total contribution margin does Boo Company earn?