Lover Company produced and sold 70,000 backpacks during the year just ended at an average price of P300 per unit. Variable manufacturing costs were P120 per unit and variable marketing costs were P60 per unit sold. Fixed costs amounted to P5,400,000 for manufacturing and P2,160,000 for marketing. There was no year-end work-in-process inventory. Compute for Lover’s breakeven point in peso sales for the year. Lover’s variable manufacturing costs are expected to increase by 10% in the coming year. Compute the firm’s breakeven point in peso sales for the coming year. If Lover’s variable manufacturing cost do increase by 10%, compute the selling price that would yield the same contribution margin in the coming year.

Lover Company produced and sold 70,000 backpacks during the year just ended at an average price of P300 per unit. Variable manufacturing costs were P120 per unit and variable marketing costs were P60 per unit sold. Fixed costs amounted to P5,400,000 for manufacturing and P2,160,000 for marketing. There was no year-end work-in-process inventory. Compute for Lover’s breakeven point in peso sales for the year. Lover’s variable manufacturing costs are expected to increase by 10% in the coming year. Compute the firm’s breakeven point in peso sales for the coming year. If Lover’s variable manufacturing cost do increase by 10%, compute the selling price that would yield the same contribution margin in the coming year.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 35P

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