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How much would be the profit resulting to the sales increase

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Reference no: EM132715586

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?

Reference no: EM132715586

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