Reference no: EM132724986

Questions -

Q1. Wyeth Company's unit cost of manufacturing and selling a given item at an activity level of 10,000 units per month are;

Manufacturing Costs;

Direct Materials P39

Direct labor 6

Variable Overhead 8

Fixed Overhead 9

Selling Expenses;

Variable 30

Fixed 11

The company desires to seek an order for 5,000 units from a foreign customer. The variable selling expenses will be reduced by 40%, but the fixed costs for obtaining the order will be P20,000. Domestic sales will not be affected by the order. What is the minimum breakeven price per unit to be considered on this special sales order?

Q2. Mina Co. mines 3 products. Gold ore sells for P1,000,000 per ton; variable costs are P600,000 per ton and fixed mining costs are P6,000,000. The segment margin for 2005 was P1,200,000. The management of Mina Co. was considering dropping the mining of Gold Ore. Only one-half of the fixed expenses are direct and would be eliminated if the segment was dropped. If Gold Ore were dropped, What is the effect on net income of Mina Co?

Q3. A part used in the assembly of a final product is manufactured by Guba Tool Co. in two operations. Ordinarily, 150,000 parts are manufactured each year with total manufacturing costs as follows:

Operation 1;

Direct Materials P84,000

Direct Labor 78,000

Variable costs of supplies and indirect materials 18,000

Allocated costs of plant occupancy 36,000

Operation 2;

Direct labor 23,000

Variable costs of supplies and indirect materials 11,000

Allocated costs of plant occupancy 27,000

P277,000

Operation 1 can be eliminated if these parts are purchased from an outside supplier at a price of P1.10 per unit. The space used for Operation 1 can be rented for P6,000 a year. The parts purchased from an outside supplier will still have to be put through Operation 2. If the parts are purchased, the company must absorb the freight charges estimated at P15,000 a year. What is the best alternative and by what amount is it more advantages?