In 2018, the company's sales was P 500,000. Its fixed costs amounted to P 100,000 per year. In 2019, sales was 20% higher, while profit was P 30,000 higher than the 2018 profit. For 2020, the company expects to have sales that is twice as much as the 2018 sales. The expected increase in production to meet the sales demand in 2020 will not require the company to exceed its normal capacity. a. What is the company's contribution margin ratio? b. How much profit does the company expect to eam in 2020?

In 2018, the company's sales was P 500,000. Its fixed costs amounted to P 100,000 per year. In 2019, sales was 20% higher, while profit was P 30,000 higher than the 2018 profit. For 2020, the company expects to have sales that is twice as much as the 2018 sales. The expected increase in production to meet the sales demand in 2020 will not require the company to exceed its normal capacity. a. What is the company's contribution margin ratio? b. How much profit does the company expect to eam in 2020?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

For this year 2020, Dulce Candies expects a 15% increase from 2019 sales of P75,000. It hopes to maintain cost of sales ratio at 32%; and marketing and administrative expenses at 8% of sales. Based on these assumptions, 8. Amount of sales for year 2020 should be a) P11,250 | b) P24,000 c) P86,250 d) P105,000 9. Cost of sales at that volume is expected to be b) P63,750 a) P24,000 10. Marketing and administrative expenses should be around P99,000 d) P105,000 a) P75,000 b) P32,000 P11,250 d) P6,000
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?
20% of Cuin 2018, the company's sales was P 500,000. Its fixed costs amounted to P 100,000 per vear. In 2019, sales was 20% higher, while profit was P 30,000 higher than the 2018 profit. For 2020, the company expects to have sales that is twice as much as the 2018 sales. The expected increase in production to meet the sales demand in 2020 will not require the company to exceed its normal capacity. . 6. What is the company's contribution margin ratio? 7. How much profit does the company expect to earn in 2020? HI A company's breakeven sales (BES) is P 600,000. If fixed costs would increase by 10% of this BES, such BES would increase by 40%. 8. What is the company's variable cost ratio? 9. How much is fixed costs at the new BES level?
Data are as follows: In year 2020, sales are 150,000 units with Selling price per unit of 10 and VC per unit iof 6.50 per unit. Fixed cost is 155,000 and Interest cost is 90,000. Q3. Assume that the company expects to have sales increase by 20%, what will be the resulting change in EBIT in year 2021? A• 25% B• 26.45% C• 33.33% D• 28.38%
The management of Valencia Manufacturing Company is desirous of increasing operating incomeby 20% in 2019. They expect per unit data and total fixed costs to remain the same in 2018.Determine the number of units that must be sold to earn this target operating profit. Is this a realisticgoal?
Rose Trading had RM210,000 of net profit in year 2021 when the selling price per unit was RM150, the variable costs per unit were RM90, and the fixed costs were RM570,000. Management expects per unit data and total fixed costs to remain the same in year 2022. The manager of Rose Trading is under pressure from investors to increase net profit by RM52,000 in year 2022.Required:(i) Compute the number of units sold in year 2021.(ii) Compute the number of units that would have to be sold in year 2022 to reach the shareholders’ desired profit level.
Assume that next year, management wants the company to earn a minimum profit of $ 500,000. How many units will have to sold to meet this target profit figure?
Armin, Inc. had the following economic data for 2019 (refer to the attached picture): What is Armin’s breakeven point in 2019? net sales 400,000 contribution margin 160,000 margin of safety 40,000
Covid2020 Furniture is operating at almost 100% capacity. The company expects sales to increaseby 20% in 2020. To satisfy the demand for its products, the company is considering twoalternatives: The first alternative would increase fixed costs by 15% but not affect variable costs. The second alternative would not affect fixed costs but increase variable costs to 60% ofthe selling price of the company’s product.Covid2020 Furniture’s income statement for 2019 is as follows:Sales RM1,800,000Costs:Variable RM810,000Fixed RM165,000 RM975,000Income before taxes RM825,000REQUIRED:(a) Determine the break-even point in sales dollars for 2020 under the first alternative.(b) Determine the break-even point in sales dollars for 2020 under the second alternative.(c) Determine projected income before taxes for 2020 under each of the alternatives.(d) Which alternative would you recommend? Why?
In 2019, Deepika Company has sales of $800,000, variable costs of $200,000, and fixed costs of $300,000. In 2019, the company expects annual property taxes to decrease by $15,000. Required: a. Calculate operating income and the breakeven point for 2019. b. Calculate the breakeven point for 2019.
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.
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?