chapter-10 - This Accounting Materials are brought to you by

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
This Accounting Materials are brought to you by www.everything.freelahat.com CHAPTER 10 PRODUCT PRICING AND GROSS PROFIT VARIATION ANALYSIS [Problem 1] 1. Unit variable costs P30 Unit variable expense 3 Unit fixed overhead 5 Unit fixed expense 4 Unit costs and expenses 42 Mark-up (50%) 21 Unit sales price P63 2. USP P63 UVCE (P30 + P3) 33 UCM P30 Mark–up on CM = Non – Cost Items + Profit Non – Cost Based = P3 + P5 + P4 + P21 = 110% P30 [Problem 2] 1. USP = P2.50 x 150% = P3.75 2. USP = P3.50 x 140% = P4.90 3. USP = P3.00 x 145% = P4.35 4. USP = P5.90 x 135% = P7.965 5. USP = P3.50 x 135% = P4.725 6. USP = P2.20 x 160% = P3.52 [Problem 3] Unit variable production costs P3.00 Unit shipping costs 0.75 Incremental fixed costs (P40,000/10,000) 4.00 Minimum price/breakeven price P7.75 [Problem 4] Mark–up ratios on: 1. Absorption Costs = P3 + P2+ P30 = 102.94% P34 Unit Profit Margin = P6,000,000 x 15% = P30 30,000 units
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This Accounting Materials are brought to you by www.everything.freelahat.com 2. Variable Costs and Expenses = P4 + P2 + P30 P33 = 109.09% 3. Variable Production Costs = P4 + P3 + P2 + P30 = 130% P30 4. Full Costs = P30 = 76.92% P39 5. Materials Costs = P15 + P5 + P4 + P3 + P2 + P30 P20 = 295% [Problem 5] 1. Mark – up ratio = P12 + P3 + P6 = 58.33% P36 Unit fixed overhead (P600,000/50,000) P12 Unit fixed expenses (P150,000/50,000) 3 Unit profit margin [(P2,500,000 x 12%)/ 50,000] 6 2. Target unit sales price = P36 x 158.33% = P57 3. Mark-up ratio = P20 + P5 + P10 = 97.22% P36 UFxOH (P600,000/30,000) P20 UFx exp (P150,000/30,000) 5 UPM [(P2,500,000 x 12%)/ 30,000] 10 [Problem 6] 1. Technicians’ wages (P600,000/20,000 hrs) P30.00/hr Other repair costs (P200,000/20,000 hrs) 10.00/hr Ordering, handling, etc. 15.56/hr Standard time and material loading charge P 55.56/hr Ordering, handling,etc rate = P40 ÷ 140% 100 - 20% - P40 140 = P15.56
Background image of page 2
This Accounting Materials are brought to you by www.everything.freelahat.com 2. Standard time and materials cost (P55.56 x 4 hrs) P 222.24 Parts 1,200.00 Amount to be billed P1,422.24 [Problem 7] Economy Standard Deluxe Sales P50,000 P80,000 P70,000 Var CGS (40% x costs) ( 12,000) ( 16,000) ( 20,000) Sales commissions ( 5,000) ( 8,000) ( 7,000) CM P33,000 P56,000 P43,000 CMR 66% 70% 61.43% Increase in CM – Deluxe (P43,000 x 40%) P17,200 - Standard (P56,000 x 80%) 44,800 Decrease in CM- Economy (P33,000x20%) (6,600) Net Increase in CM 55,400 Old net income 5,500 Desired net income (22,200) Maximum advertising expense P38,900 [Problem 8] Recommended sales price = ? Change in USP (25%) (10%) 10% 25% Change in sales due to Change in USP ( ∆ x 2003 Qty) P (750,000) P (285,000) P 225,000 P 525,000 Change in quantity ( ∆ Qty x P 15) 450,000 300,000 (300,000) (450,000) Change in advertising and promo expenditures (90,000) (50,000) (150,000) (250,000) Change in operating income P (390,000) P (35,000) P (225,000) P (175,000) The recommended unit sales price in 2003 is still P 15. All of the possible
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/26/2010 for the course DOA 506 taught by Professor Kim during the Spring '10 term at University of Santo Tomas.

Page1 / 9

chapter-10 - This Accounting Materials are brought to you by

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online