Selling Price P60.00 Variable Manufacturing cost per unit 22.50 Variable selling and administrative costs 4.50 Fixed operating costs (60% is manufacturing cost) P148,500 Income Tax rate 30%

1. How much should sales be next year if the company wants to earn profit after tax of P23,100? (4pts)

b. Assume that the companys management learned that a new technology that will increase the quality of its product is available. If implemented, its projections for next year will be changed:

1. The selling price of the product will increase to P75 per unit.

2. Fixed manufacturing costs will increase by 20%.

3. Additional advertising costs will be incurred to promote the higher-quality product. This will increase fixed non-manufacturing cost by 10%.

4. The improved product will require a new material that will increase variable manufacturing

cost per unit by P4.50.

If the new technology is adapted, how much sales should the company make to earn a pre-tax profit of 10% on sales? (7pts)