Dennis Company sells a product for P20, variable costs are P8 per unit, and fixed costs are P32,000. a. What is Dennis' break-even point in units? b. Find the selling price that Dennis must charge to earn an P8,000 profit selling 1,600 units. c. Dennis is considering new equipment that would increase fixed costs by P2,000 while reducing unit variable costs by P1.60 per unit. Find the sales level where Dennis is indifferent between the two cost structures.

Dennis Company sells a product for P20, variable costs are P8 per unit, and fixed costs are P32,000. a. What is Dennis' break-even point in units? b. Find the selling price that Dennis must charge to earn an P8,000 profit selling 1,600 units. c. Dennis is considering new equipment that would increase fixed costs by P2,000 while reducing unit variable costs by P1.60 per unit. Find the sales level where Dennis is indifferent between the two cost structures.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 7EB: Delta Co. sells a product for $150 per unit. The variable cost per unit is $90 and fixed costs are...

See similar textbooks

Similar questions

Marchete Company produces a single product. They have recently received the results of a market survey that indicates that they can increase the retail price of their product by 8% without losing customers or market share. All other costs will remain unchanged. Their most recent CVP analysis is shown. If they enact the 8% price increase, what will be their new break-even point in units and dollars?
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?
Baghdad Company produces a single product. They have recently received the result of a market survey that indicates that they can increase the retail price of their product by 10% without losing customers or market share. All other costs will remain unchanged. If they enact the 10% price increase, what will be their new break-even point in units and dollars? Their most recent CVP analysis is:
Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer management desires a 12.5% profit margin on sales. Their current full cost for the product is $44 per unit.In order to meet the new target cost, how much will the company have to cut costs per unit, if any? a.$1 b.$2 c.$3 d.$0
what is the Revenue, cost and profit functions for the problem below? Orange Company buys Product A for P15 per units and sells them for P25 per unit. There areno other variable costs. Fixed cost is P6,000. Use the breakeven formula to determine thefollowing:a. Revenue, cost and profit functions.
XYZ Inc. sells a product for OMR 2.5 per unit. The variable cost is OMR 1.7 per unit, and fixed costs are OMR 1500. Using the Equation method Determine (a) the break-even point in sales if total fixed costs increased to OMR 2500 and, (b) the required sales in units if the company desires a target profit of OMR 3,200 assuming fixed cost remained the same at OMR 1,500.
Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer management desires a 12.5% profit margin on sales. Flyer's current full cost for the product is $44 per unit. In order to meet the new target cost, how much will the company have to cut costs per unit, if any? Oa. $1 Ob. $3 Oc. $0 Od. $2
Foris Company's product sells for P16 and has a variable cost per unit of P12. Fixed costs are P120,000. a. Compute the break-even point in pesos.b. Compute the number of units Foris must sell to earn a P30,000 profit.c. Foris has a target profit of P36,000 and expects to sell 30,000 units. Compute the selling price Foris must charge to earn the target profit.d. Foris wants to keep its selling price at P16 per unit and earn a 10% return on sales. Calculate the number of units Foris must sell to meet the target.
Use the information provided below to answer the following questions independently: 3.2.1 If Kempster Limited decides on a profit objective of R400 000, calculate the target sales volume. 3.2.2 Calculate the total Marginal Income and Profit/Loss if the company decides to reduce the selling price to R28 per unit. INFORMATION Kempster Limited expects to incur the following costs to produce and sell 20 000 units of its product at R30 each: Variable manufacturing cost R14 per unit Fixed manufacturing cost R100 000 Variable marketing cost 20% of sales Fixed marketing and administrative cost R40 000
PROBLEM SOLVING: (show step by step solution) Break-even and target profits. Analysis of the operations of FAST Company shows the fixed costs to be P200,000 and the variable costs to be P8 per unit. Selling price is P16 per unit. Derive the break-even point expressed in units. How many units must the firm sell to earn a profit of P280,000? What would profits be if revenue from sales were P2,000,000?
Shalom Company manufactures Peace Products and sells it at P500 per unit. Variable manufacturing costs to manufacture is P200 per unit, while it incurs P150 per unit to sell. The fixed costs to manufacture and sell are P150,000 and P120,000, respectively. (1) How many units should Shalom Company sell to break-even? (2) If the company targets to earn profit of P300,000, how many units should Company sell?
1. What would be the BEP in units sales if the company decides to:Increase the sales price from $100 to $105 by spending annually $5000 for advertisement? 2. What would be the BEP in units sales if the company decides to: Increase the sales price from $100 to $105 and cutting the fixed salary of the salespeople by $15000 and instead provides them $10 per unit commission? 3. Which one of the following options provides better units BEP for the company? Option A: Increase the sales price from $100 to $105 by spending annually $5000 for advertisement OptionB: Increase the sales price from $100 to $105 and cutting the fixed salary of the salespeople by $15000 and instead provides them $10 per unit commission. a) option A b) option B c) both options are same d) None of the options