MAS PROBLEMS 2018.doc

# A150000 b200000 c600000 d50000 number 10 cvp and

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A.150,000 B.200,000 C.600,000 D.50,000 Number 10 ( CVP AND BREAKEVEN ANALYSIS) Sam Company manufactures a single product. In the prior year, the company had sales of P90,000, variable costs of P50,000, and fixed costs of P30,000. Sam expects its cost structure and sales price per unit to remain the same in the current year, however total sales are expected to increase by 20 percent. If the current year projections are realized, net income should exceed the prior year’s net income by: A. 100 percent B. 80 percent C. 20 percent D. 50 percent Number 11 (CVP AND BREAKEVEN ANALYSIS) Antiporda, Inc. sells three products, A, B, and C. The company sells three (3) units of C for each unit of A and two (2) units of B for each unit of C. Total fixed costs amount to P760,000. Product A’s contribution margin per unit is P2, Product B’s is 150% of A’s, and Product C’s is twice as much as B’s. How many units of each product must be sold to break-even? Product A Product B Product C A. 2,000 12,000 6,000 B. 20,000 120,000 60,000 C. 29,231 58,462 87,692 D. 69,091 414,546 207,273

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MANAGEMENT ADVISORY SERVICES Page 5 Number s 12, 13 and 14 (CVP AND BREAKEVEN ANALYSIS) A company is making plans for next year, using cost-volume-profit analysis as its planning tool. Next year’s sales data about its product are as follows: Selling price P60.00 Variable manufacturing costs per unit 22.50 Variable selling and administrative costs 4.50 Fixed operating costs (60% is manufacturing cost)P148,500 Income tax rate 32% 12. How much should sales be next year if the company wants to earn profit after tax of P22,440, the same amount that it earned last year? A. 310,800 B. 397,500 C. 330,000 D. 222,000 13. Assume that the company’s management learned that a new technology that will increase the quality of its product is available. If implemented, its projections for next year will be changed: 1. The selling price of the product will increase to P75 per unit. 2. Fixed manufacturing costs will increase by 20%. 3. Additional advertising costs will be incurred to promote the higher- quality product. This will increase fixed non-manufacturing cost by 10%. 4. The improved product will require a new material that will increase direct materials cost by P4.50 If the new technology is adapted, how much sales should the company make to earn a pre-tax profit of 10% on sales? A. 366,130 B. 358,875 C. 253,324 D. 353,897 14. If the sales required in Item #13 is realized, the company will have an operating leverage factor of A. 8.53 B. 5.80 C. 7.24% D. 5.50 Number 15 (CVP AND BREAKEVEN ANALYSIS) Yamyam Company is considering introducing a new product that will require a P250,000 investment of capital. The necessary funds would be raised through a bank loan at an interest rate of 8%. The fixed operating costs associated with the product would be P122,500 while the variable cost ratio would be 58%. Assuming a selling price of P15 per unit, determine the number of units (rounded to the nearest
MANAGEMENT ADVISORY SERVICES Page 6 whole unit) Yamyam would have to sell to generate earnings before interest and taxes (EBIT) of 32% of the amount of capital invested in the new product.

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