RST Corporation is planning of introducing two new products in the market this 2017. Either will be produced using the current company facilities. Each product will sell at P 100 and the same variable cost of P 60 per unit. Annual fixed cost will increase by P 400,000 in both products. Based on previous experiences, the management team has arrived at the following probability distribution:

Quantity Demanded Probability_______

______(units) Product 1 Product 2

10,000 10% 10%

20,000 20% 10%

30,000 40% 20%

40,000 20% 40%

50,000 10% 20%

Questions:

a) Calculate the break-even point in units for Product 1 and break-even point in pesos for Product 2.

Product 1: Answer units

Product 2: PAnswer

b) Compute the expected demand for Product 1 and Product 2.

Product 1: Answer units

Product 2: Answer units

c) Calculate the operating income for Product 1 and Product 2.

Product 1: PAnswer

Product 2: PAnswer

d) If only one product will be produced, which one will be your choice? Answer