FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
The Valdez Mug Company manufactures plastic mugs that sell to wholesalers for P4.00
each. Variable and fixed costs are as follows:
Valdez Mug produced and sold 10,000 cups during April 2019. There were no beginning or ending inventories.
Required:
a. Determine Valdez Mug's monthly break-even point in units.
b. If monthly sales increase by 500 cups, what will be the change in monthly profits?
c. If Valdez Mug is now subject to an income tax of 40 percent, what dollar sales volume is required to earn a monthly after-tax net income of P12,000?
Transcribed Image Text:Variable Costs per Unit
Fixed Costs per Month
Manufacturing:
Direct materials
P 8,000
6,000
P14,000
PO.60
Factory overhead
Selling and adm.
Total
Direct labor
0.70
0.50
Factory overhead
Selling and adm.
Total
P1.80
0.40
P2.20
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