Problem: Austin, Brown, Freeman

Below are income statements that apply to three companies: Austin Co., Brown Co., and Freeman Co.:

	Austin Co.	Brown Co.	Freeman Co.
Sales	P100	P100	P100
Variable costs	(10)	(20)	(30)
Contribution margin	P90	P80	P70
Fixed costs	(30)	(20)	(10)
Profit before taxes	P60	P60	P60

Required:

1. Within the relevant range, if sales go up by P1 for each firm, which firm will experience the greatest increase in profit?
2. Within the relevant range, if sales go up by one unit for each firm, which firm will experience the greatest increase in net income?
3. At sales of P100, which firm has the highest margin of safety?

Problem: Coontz Company

The Coontz Company sells two products, A and B, with contribution margin ratios of 40 and 30 percent and selling prices of P5 and P2.50 a unit. Fixed costs amount to P72,000 a month. Monthly sales average 30,000 units of product A and 40,000 units of product B.

1. Assuming that three units of product A are sold for every four units of product B, calculate the peso sales volume necessary to break even.
2. As part of its cost accounting routine, Coontz Company assigns P36,000 in fixed costs to each product each month. Calculate the break-even peso sales volume for each product.
3. Coontz Company is considering spending an additional P9,700 a month on advertising, giving more emphasis to product A and less emphasis to product B. If its analysis is correct, sales of product A will increase to 40,000 units a month, but sales of product B will fall to 32,000 units a month. Recalculate the break-even sales volume, in dollars, at this new product mix. Should the proposal to spend the additional P9,700 a month be accepted?

Problem: Oakwood, Inc

Oakwood, Inc. recently sold 70,000 units, generating sales revenue of P4,900,000. The company's variable cost per unit and total fixed cost amounted to P20 and P2,800,000, respectively. Management is in the process of studying the peso impact of various transactions and events, and desires answers to the following independent cases:

1. Management wants to lower the firm's break-even point to 52,000 units. All other things being equal, what must happen to fixed costs to achieve this objective?
2. The company anticipates a P2 hike in the variable cost per unit. All other things being equal, if management desires to keep the firm's current break-even point, what must happen to Oakwood's selling price? If selling price remains constant, what must happen to the firm's total fixed costs?

Please include solutions, thank you!