Reference no: EM133013620

PROBLEM 1 - In 200A, the company's sales was P500.000, Its fixed costs amounts to P100,000 per year. In 200B, sales was higher, while profit was P30,000 higher than the 200A figures.

For 200C, the company expects to have sales that is twice as much as the 200A sales. The expected increase in production to meet thee sales demand in 200C will not require the company exceed its normal capacity.

Required -

a. What is the company's contribution margin ratio?

b. How much profit does the company expect to earn in 200C?

c. What is the company's break-even point in units?

PROBLEM 2 - Ramos Corporation, a manufacturer of light bulbs, budgeted sales of 500,000 units of light bulbs at P100 per unit for the year 200A. Variable manufacturing costs was budgeted at P40 per unit and fixed manufacturing costs at P25 per unit.

A special order offering to buy 50,000 units of light bulbs for P58 each was received by Ramos Corporation in march 200A. Ramos Corp. has sufficient plant capacity to produce the additional units of light bulbs. However, overtime work has to be done at an additional cost of P8 per unit. No selling expense would be incurred for this special order.

Required -

a. Should Ramos Corporation accept the special order, assuming that it would not affect regular sales? Why or Why not? Explain

b. Assume that the available (excess) capacity for the special order is only 30,000 units, and that if the 50,000 units being ordered is accepted, Ramos Corporation would reduce its sales to the regular customers. Should the corporation accept the order?

Problem 3 - Case Corporation produces cellular phone cases. Each case requires a keypad which it also manufactures at a cost per P20 per unit, inclusive of fixed overhead costs of P5.

Case Corporation needs 50,000 units of this keypad annually. A supplier, Keypad Corp., has offered to sell to Case Corp. Its keypad requirements at P24 per unit. If Case decides to buy the keypads, P2 per unit of the fixed overhead based on the annual estimate could be eliminated, and the facility previously used to produce the keypad could be rented to another company.

Required -

a. If Case Corp. outsource the keypads but does not rent the unused facility, it would _ _ _ _ _ _ _? Explain.

b. If the keypads were purchased and the facility rented, how much must the annual rent on the facility be if Case Corporation wishes to realize annual savings of P80,000?