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A company has a single product. The company currently sells 8,000 units of the product at P45 per unit. The company's costs at this level of activity are given below:
Direct labor 8
Direct materials P10
Variable overhead 4
Variable selling expense 2
Fixed overhead 60,000
Fixed selling expenses 20,000
Required:
Question 1. What is the Company's present profit?
Question 2. The Company could increase its sales by 25% if it spends P30,000 for advertisement. How much would be the profit resulting to this sales increase?
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