Alpha Frontier Inc. introduced a product ten years ago. The product's patent has now expired and Alpha expects a significant increase in suppliers for this product. Alpha originally sold the products at P1,500 each but competitors will likely sell it at P1,450. Last year, Alpha had actual and budgeted cost per unit of P806.67 and P783.33 respectively. If Alpha wants to maintain the profit per unit earned last year, how much should the decrease in the budgeted cost per unit be for the coming year? Last Year Budgeted -Actual Total Costs P 1,175,000 P 1,210,000 Units Sold 1,500.00 1,500.00 Cost per unit 783.33 P 806.67

Alpha Frontier Inc. introduced a product ten years ago. The product's patent has now expired and Alpha expects a significant increase in suppliers for this product. Alpha originally sold the products at P1,500 each but competitors will likely sell it at P1,450. Last year, Alpha had actual and budgeted cost per unit of P806.67 and P783.33 respectively. If Alpha wants to maintain the profit per unit earned last year, how much should the decrease in the budgeted cost per unit be for the coming year? Last Year Budgeted -Actual Total Costs P 1,175,000 P 1,210,000 Units Sold 1,500.00 1,500.00 Cost per unit 783.33 P 806.67

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 9EB: Baghdad Company produces a single product. They have recently received the result of a market survey...

See similar textbooks

Similar questions

Alpha Frontier Inc. introduced a product ten years ago. The product’s patent has now expired and Alpha expects a significant increase in suppliers for this product. Alpha originally sold the products at P 1,500 each but competitors will likely sell it at P1,450. Last year, Alpha had actual and budgeted cost per unit of P806.67 and P783.33 respectively. If Alpha wants to maintain the profit per unit earned last year, how much should the decrease in the budgeted cost per unit be for the coming year? Budgeted Last Year Actual Total Costs P 1,175,000 P 1,210,000 Units Sold 1,500.00 1,500.00 Cost per unit P 783.33 P 806.67
Alpha Frontier Inc. introduced a product ten years ago. The product's patent has now expired and Alpha expects a significant increase in suppliers for this product. Alpha originally sold the products at P1,500 each but competitors will likely sell it at P1,450. Last year, Alpha had actual and budgeted cost per unit of P806.67 and P783.33 respectively. If Alpha wants to maintain the profit per unit earned last year, how much should the decrease in the budgeted cost per unit be for the coming year? Last Year Budgeted -Actual Total Costs P 1,175,000 P 1,210,000 Units Sold 1,500.00 1,500.00 Cost per unit 783.33 P 806.67
In 200A, the company’s sales was P500,000. Its fixed costs amounts to P100,000 per year. In 200B, sales was higher, while profit was P30,000 higher than the 200A figures. For 200C, the company expects to have sales that is twice as much as the 200A sales. The expected increase in production to meet the sales demand in 200C will not require the company exceed its normal capacity. Required: How can you show that the company’s contribution margin ratio is 30% How can you show that the profit the company expect to earn in 200C is 200,000 Can you determine the company’s break-even point in units?
APQ Company currently sells a piece of equipment for $150 per unit. It plans on lowering the price of the unit to $119 per unit. The cost of goods for each unit is consistent each year, at $52 per unit. The company expects to sell 100,000 units in the current year. Suppose that if APQ drops the price on the equipment immediately, it can increase sales over the next year by 30% to 130,000 units. Will this price decrease have a positive or negative impact on the company's EBIT? What will be the dollar value of the incremental impact of this price drop on the firm's EBIT? Will this have a positive or negative impact on the EBIT for the company? What will the dollar value of the incremental impact of the price drop be for the company? (Enter a negative for a loss, positive for a gain; round your answer to the nearest whole dollar.)
Hyperion, Inc. currently sells its latest high-speed color printer, the Hyper 500, for $350. It plans to lower the price to $300 next year. Its cost of goods sold for the Hyper 500 is $200 per unit, and thi year's sales are expected to be 20,000 units.a) Suppose that if Hyperion drops the price to $300 immediatley, it can increase this year's sales by 25% to 25,000 units. What would be the incremental impact on this eyar's EBIT of such a price drop?b) Suppose that for each printer sold, Hyperion expects additional sales of $75 per year on ink cartridges for the next years, and Hyperion has a gross profit margin of 70% on ink cartridges. What is the incremntal impact on EBIT for the next three years of a priced drop this year?
Nytre Limited sells executive office chairs for a price of $195 each. The contribution margin ratio of the chairs is 60% and the company’s fixed costs for this year are expected to be $80,000. The company has a profit target this year of $85,000 and is considering an improved design which is expected to increase sales. Question 13: How many chairs must the company sell to reach its profit target?
A firm manufactures and sells high quality business printers and ink toners. Each printer sells for $650 and each toner for $100. The average user keeps the printer for 5 years and consumes 4 toners every year. In response to a recent significant drop in printer sales (which will reduce future toner sales as well) the firm wants to lower the printer price to $500. Assume that income from toner sales occurs at year-end and the firm’s cost of capital is 10%. How much of an increase is needed in the toner price to cover the loss in printer price?
SCM Company currently sells a camera for P12,000. An aggressive competitor has announced plans for a similar product that will be sold for P10,250. SCM's marketing department believes that if the price is dropped to meet competition, unit sales will increase by 10%. The current cost to manufacture and distribute the camera is P8,750, and SCM has a profit goal of 20% of sales. If SCM meets competitive selling prices, what is the company's target cost? P2,400. P8,200. P8,750. P9,600. None of the above
Last year Minden Company introduced a new product and sold 15,000 units at a price of $74 per unit. The product's variable expenses are S44 per unit and its fixed expenses are $521,400 per year. Required: What was this product's net operating income (loss) last year? What is the product's break-even point in unit sales and dollar sales? Assume the company conducted a marketing study that estimates it can increase annual sales of this product by 5,000 units for each $2 reduction in its selling price. If the company will only consider price reductions in increments of $2 (e.g., S72, S70, etc.), what is the maximum annual profit it can earn on this product? What sales volume and selling price per unit generate the maximum profit? What would be the break-even point in unit sales and dollar sales using the selling price you calculated in requirement 37
Lucid Images Ltd manufactures premium high definition televisions. The firm’s fixed costs are$4,000,000 per year. The variable cost of each TV is $2,000, and the TVs are sold for $3,000 each. Thecompany sold 5,000 TVs during the previous year. (In the following requirements, ignore income taxes) d.) The sales manager believes that a reduction in the sales price to $2,500 will result in orders for1,200 more TVs each year. What will the break-even point be if the price is changed?
Orange Nebula Equipment Company (ONEC) manufactures a variety of harpooning equipment. The company would like to develop a unified approach to pricing its product line for next year using cost-plus pricing but does not know what cost base should be used. Last year, ONEC earned $150,000 of profit from sales of its products and would like to earn $225,000 next year. Last year, the company incurred the following costs: Manufacturing Costs: Variable 260,000.00 Fixed 160,000.00 Selling and Administraitve: Variable 90,000.00 Fixed 180,000.00 Calculate the Markup Percentage based on a cost basis of All variable and fixed costs. (provide your answer in % form to two decimal places, i.e. 37.428% = 37.43)
Orange Nebula Equipment Company (ONEC) manufactures a variety of harpooning equipment. The company would like to develop a unified approach to pricing its product line for next year using cost-plus pricing but does not know what cost base should be used. Last year, ONEC earned $150,000 of profit from sales of its products and would like to earn $225,000 next year. Last year, the company incurred the following costs: Manufacturing Costs: Variable 260,000.00 Fixed 160,000.00 Selling and Administraitve: Variable 90,000.00 Fixed 180,000.00 Calculate the Markup Percentage based on a cost basis of Total variable costs. (provide your answer in % form to two decimal places, i.e. 37.428% = 37.43)