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J&J Music Builders is a new business in the industry. Currently, they are producing and selling bamboo organs and flutes. They are planning to add guitar to their instruments. Based on the study conducted, the following are cost data related to the creation of conventional and electric guitars:
Conventional ElectricDirect Materials P1,200 / unit P1,800 per unitDirect Labor P1,800 / unit P450 / unitFixed Factroy Overhead 16,000 47,970Variable Factory Overhead 240 / unit 720 / unitVariable Selling Expense 80 / unit 120 / unit
Problem 1: Compute for the number of guitar sales which would give J&J the same operating income when they choose either of the alternative presented above
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