MSQ-01 - Activity Cost & CVP Analysis (Final)

Wheels corp employs 45 sales personnel to market its

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32. Wheels Corp. employs 45 sales personnel to market its sedan cars. The average car sells for P690,000 and a 6% commission is paid to the sales person. It is considering changing the scheme to a commission arrangement that would pay each person a package of P30,000 plus a commission of 2% of the sales made by the person. The amount of total monthly car sales at which Wheels Corp. would be indifferent (answer may be rounded off) as to which plan to select is 33. Two companies are expected to have annual sales of 1,000,000 decks of playing cards next year. Estimates for next year are presented below: Company 1 Company 2 Selling price per deck $ 3.00 $3.00 Cost of paper deck 0.62 0.65 Printing ink per deck 0.13 0.15 Labor per deck 0.75 1.25 Variable overhead per deck 0.30 0.35 Fixed costs $960,000 $252,000 Given these data, which of the following responses is correct? (In units) A . B. C. D. Breakeven point for Co. 1 800,000 800,000 533,334 533,334 Breakeven point for Co. 2 420,000 420,000 105,000 105,000 Volume at which profits of Co. 1 and Co. 2 are equal 1,180,000 1,000,000 1,000,000 1,180,000 Questions 34 and 35 are based on the following information. A company sells two products, X and Y. The sales mix consists of a composite unit of two units of X for every five units of Y (2:5). Fixed costs are $49,500. The unit contribution margins for X and Y are $2.50 and $1.20, respectively.
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