Reference no: EM133087816

Questions -

Q1) Dikit corporation makes three different clothing fasteners, Data concerning the three products are as follows:

	VELCRO	METAL	NYLON
Normal monthly sales volume	100,000	200,000	400,000
Unit selling price	P1.65	P1.50	P0.85
Varoable cost per unit	1.25	0.70	0.25

Total fixed expenses are P400,000 per month. All three products are sold in highly competitive markets, so the company is unable to raise its prices without losing unacceptable number of customers. The company has an extremely lean production system, so there is no beginning or ending work in process or finished goods inventories. What is the company's over-all break-even in pesos?

Q2) A company sells its product at P30 per unit. Unit variable cost is P22 and total fixed costs total to P100,000 per month. The company currently pays salaries of P40,000 per month but with no commission. It is considering a compensation plan whereby the salespeople would receive 5% commission based on sales, but their salaries would be decreased to P25,000 per month. At what sales level is the company indifferent between the two compensation plans?

Q3) Copycat manufacturing company is subject to a 30% income tax rate, had the following operating data: Selling price per unit, P60; variable cost per unit, P22 and fixed costs of P504,000. Management plans to improve the quality of its product by replacing a component that costs P3.50 with a higher grade material that costs P5.50 and acquiring a P180,000 packing machine. The company will depreciate the machine over a 10 year life with no estimated salvage value using the straight line method of depreciation. If the company wants to earn an after tax income of P201,600, how many units must it sell under the new proposal?