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Problem 3. (25 Mins.) Mikey Aruyco started his Chick Burger in 20X1. He rented a mobile restaurant and placed this in a busy intersection in
Problem 3. (25 Mins.) Mikey Aruyco started his "Chick Burger" in 20X1. He rented a mobile restaurant and placed this in a busy intersection in Makati. He hired two persons to do the cooking and another two high school students to deliver orders from nearby offices. A parttime bookkeeper was also hired. The necessary cooking equipment was purchased with cash. He noticed that supplies and utilities have been constant. Mr. Aruyco increases his business between 201 and 20x3. Profits have more than doubled since 20x1. Mr. Aruyco cannot understand why his profits have increased faster than the volume of his sales. The selling price per "chick burger" is P8.50 and his income tax bracket is 30%. A projected income statement for 20x4 is shown below: v Required: Assume that the cost of good sold is the only variable expense. 1. What is the break-even point in number of chick burgers that must be sold? 2. If Mr. Aruyco aims to have an after-tax net income of P60,000, what volume must be sold to get this income? Round-up number of units
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