A company is making plans for next year, using cost-volume-profit analysis as its planning tool. Next year's sales data about its product are as follows Selling price P60 Variable manufacturing costs per unit 22.50 Variable selling and administrative costs 4.5 Fixed operating costs (60% is manufacturing costs) P159,500 Income tax rate 30% How much should sales be next year if the company wants to earn profit after tax of P23,100, the same amount that it earned last year?

A company is making plans for next year, using cost-volume-profit analysis as its planning tool. Next year's sales data about its product are as follows Selling price P60 Variable manufacturing costs per unit 22.50 Variable selling and administrative costs 4.5 Fixed operating costs (60% is manufacturing costs) P159,500 Income tax rate 30% How much should sales be next year if the company wants to earn profit after tax of P23,100, the same amount that it earned last year?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 36P: Faldo Company produces a single product. The projected income statement for the coming year, based...

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Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
Calculate gross profit, cost of goods sold, and selling price MBI Inc, had sales of $900 million for fiscal 2022. The company’s gross profit ratio for that year was 37.5%.Required:Calculate the gross profit and cost of goods sold for MBI for fiscal 2022.Assume that a new product is developed and that it will cost $1,625 to manufacture. Calculate the selling price that must be set for this new product if its gross profit ratio is to be the same as the average achieved for all products for fiscal 2022.From a management viewpoint, what would you do with this information?
A company expects to sell 20,000 units of a product next year. Variable production cost is ₱15 and variable selling costs is 15% of the selling price. Fixed expenses are ₱250,000 per year. The firm set a target profit of ₱100,000 (ignoring tax). Based on the information, the unit selling price should be? a. ₱17.50 b. ₱17.65 c. ₱32.50 d. ₱38.24 e. ₱216.67
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Attica Candy Company is a wholesale distributor of candy. The company services grocery, con- venience, and drug stores in a large metropolitan area. Attica has achieved modest but steady growth in sales over the past few years, while candy prices have been increasing. The company is formulating its plans for the coming fiscal year. Following is the data used to project the current year's after-tax net income of $110,400. Average selling price 4.00 per box Average variable costs: Cost of candy Selling expenses 2.00 per box 0.40 per box 2.40 per box Annual fixed costs: $ 160,000 280,000 $ 440,000 Selling Administrative Expected annual sales volume (390,000 boxes) S1,560,000 Tax rate 40% Manufacturers of candy have announced they will increase prices of their products an aver- age of 15 percent in the coming year due to increases in raw materials (sugar, cocoa, peanuts, etc.) and labour costs. Attica Candy Company expects all other costs will remain at the same rates or levels as the…
A company expects to sell 30,000 units of a product next year. Variable production cost is ₱25 and variable selling costs is 40% of the selling price. Fixed expenses are ₱650,000 per year. The firm set a target profit after tax of ₱250,000. Tax rate is 25%. Based on the information, the unit selling price should be? a. ₱ 62.50 b. ₱ 32.50 c. ₱ 10.00 d. ₱ 38.24 e. ₱ 41.67 f. ₱ 100.00
MBI Incorporated had sales of $35 million for fiscal 2022. The company's gross profit ratio for that year was 26%. Required: a. Calculate the gross profit and cost of goods sold for MBI for fiscal 2022. b. Assume that a new product is developed and that it will cost $469 to manufacture. Calculate the selling price that must be set for this new product if its gross profit ratio is to be the same as the average achieved for all products for fiscal 2022. c. From a management viewpoint, it could use the estimated selling price as a "target" in conducting marketing research studies to assess its ultimate prospects for success at this price. Complete this question by entering your answers in the tabs below. Required A Required B Required C From a management viewpoint, it could use the estimated selling price as a "target" in conducting marketing research studies to assess its ultimate prospects for success at this price.
ABC Corp has the following data in year 2020: Sales 400,000; Variable cost 300,000 and Net loss 50,000. If the company wants to have a profit ratio of 10% of sales in year 2021, how much is the additional sale needed by ABC Corp to meet the target profit ratio?
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Question 3: Mirbat Company's financial information is given in the table below. Year 2020 2021 Sales (OMR) Fixed Costs 445000 500000 105000 150000 Variable Costs 245000 280000 You are required to calculate the following values for each year. The years are independent of each other. a) Margin of safety at a profit of OMR 50000 b) Profit when sales are OMR. 300000.