Reference no: EM132556452

Lee Gon Corporation has the following revenue and cost characteristics on their only product:

Selling price per unit P 6.00

Variable cost per unit P 4.20

Annual fixed costs P 360,000

Annual volume 270,000 units

Required:

Question 1. For each of the following independent cases, determine the new contribution margin ratio, break-even point in pesos, and net profit.

a. 5% increase in selling price

b. 20% increase in variable costs

c. 50% increase in fixed costs

d. 5% increase in sales and production volume

e. Decrease of P30,000 in fixed costs

f. Decrease in variable costs of P0.20

g. Decrease in variable costs of P0.60 and 20% increase in selling price

h. 20% decrease in fixed costs and 20% increase in variable cost.

Question 2. Which among the various changes above will be the most beneficial to the company and which one will be the most detrimental? Justify your answer.