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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?
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