Reference no: EM132576263
Question - Candyman Company is a wholesale distributor of candy. The company services grocery, convenience, and drug stores in Metro Manila. Small but steady growth in sales has been achieved by the company over the past few years while candy prices have been increasing. The company is formulating its plans for the coming fiscal year. Presented below are the data used to project the current year's after-tax net income of P110,400.
Manufacturers of candy have announced that they will increase prices of their products an average of 15% in the coming year due to increases in raw material (sugar, cocoa, peanuts, etc.) and labor costs. Candyman Company expects that all other costs will remain at the same rates or levels as the current year. Candyman is subject to 40 percent tax rate.
Average selling price P4.00 per box
Average variable costs
Cost of candy P2.00 per box
Selling expenses 0.40 per box
Total P2.40 per box
Annual fixed costs
Selling P169,000
Administrative 280,000
Total P440,000
Expected annual sales volume (390,000 boxes) P1,560,000
If net income after taxes is to remain the same after the cost of candy increases but no increase in the sales price is made, how many boxes of candy must Candyman sell?
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