Twenty Twenty One Corp. Income Statement For the month ended December 31, 2020 Sales (P10/unit) ...................................................................................................... P900,000 Variable Costs: Variable Cost of Goods Sold: Beginning Inventory ............................................................. P125,000 Variable Cost of Goods Manufactured ............................... 400,000 ---------------- Total Goods Available for Sale ........................................... 525,000 Ending Inventory ................................................................. 75,000 ---------------- Variable Cost of Goods Sold .............................................. 450,000 Variable Selling Expense ....................................................... 90,000 540,000 ----------------- ------------------- Contribution Margin ................................................................................................ P360,000 Fixed Costs: Manufacturing ................................................................... P240,000 Selling and Administrative ................................................ 90,000 330,000 ------------------ ------------------ Operating Profit ..................................................................................................... P30,000 ========== During December 2020, the entity manufactured a total of 80,000 units 4.Assuming the entity raises its unit sales by 15%, how much would be the expected increase in the profit before tax? 5.Assuming that there was a proposal to increase fixed selling costs by P50,000, which would increase sales by 20%, how much would be the expected increase in the before-tax profit?
Twenty Twenty One Corp.
Income Statement
For the month ended December 31, 2020
Sales (P10/unit) ...................................................................................................... P900,000
Variable Costs:
Variable Cost of Goods Sold:
Beginning Inventory ............................................................. P125,000
Variable Cost of Goods Manufactured ............................... 400,000
----------------
Total Goods Available for Sale ........................................... 525,000
Ending Inventory ................................................................. 75,000
----------------
Variable Cost of Goods Sold .............................................. 450,000
Variable Selling Expense ....................................................... 90,000 540,000
----------------- -------------------
Contribution Margin ................................................................................................ P360,000
Fixed Costs:
Manufacturing ................................................................... P240,000
Selling and Administrative ................................................ 90,000 330,000
------------------ ------------------
Operating Profit ..................................................................................................... P30,000
==========
During December 2020, the entity manufactured a total of 80,000 units
4.Assuming the entity raises its unit sales by 15%, how much would be the expected increase in the profit before tax?
5.Assuming that there was a proposal to increase fixed selling costs by P50,000, which would increase sales by 20%, how much would be the expected increase in the before-tax profit?
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