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Compute the number of guitar sales

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Question - 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

Electric

Direct Materials

P1,200 / unit

P1,800 per unit

Direct Labor

P1,800 / unit

P450 / unit

Fixed Factroy Overhead

16,000

47,970

Variable Factory Overhead

240 / unit

720 / unit

Variable Selling Expense

80 / unit

120 / unit

Required - Compute the number of guitar sales which would give J&J the same operating income when they choose either of the alternative presented above?

Reference no: EM132800005

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