Spikey company can increase the sales of pat with

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Spikey company can increase the sales of Pat with increased advertising. The extra advertising would cost an additional P245,000, and some of the potential purchasers of Chin would switch to Pat. In total, sales of Pat would increase by 25,000 units, and sales of Chin would decrease by 5,000 units. This strategy would A. Increase Spikey’s total sales by 750,000. B. Decrease Spikey’s total contribution margin by 300,000. C. Increase Spikey’s total income by 55,000. D. Not affect Spikey’s total fixed costs. Numbers 42 and 43 ( DIFFERENTIAL COSTS ANALYSIS) Demigod Corporation, a manufacturer of light bulbs, budgeted sales of 500,000 units of light bulbs at P100 per unit for the year 2015. Variable manufacturing costs was budgeted at P40 per unit and fixed manufacturing costs at P25 per unit. A special order offering to buy 50,000 units of light bulbs for P58 each was received by Demigod Corporation in March 2015. Demigod Corp. has sufficient plant capacity to produce the additional units of light bulbs. However, overtime work has to be done at an additional cost of P8 per unit. No selling expenses would be incurred for this special order. 42. Should Demigod Corporation accept the special order, assuming that it would not affect regular sales? A. Yes, because operating income would increase to 500,000. B. Yes, because operating income would increase by 500,000. C. No, because the special price of P58 is much lower than the regular price of 100. D. No, because the special price of P58 is lower than the full cost of 65. 43. Assume that the available (excess) capacity for the special order is only 30,000 units, and that if the 50,000 units being ordered is accepted, Demigod Corporation would reduce its sales to the regular customers. Should the corporation accept the order?
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MANAGEMENT ADVISORY SERVICES Page 14 A. Yes, because operating income would increase by 500,000. B. Yes, because operating income would increase by 2,500,000. C. No, because operating income would decrease by 700,000. D. No, because operating income would decrease by 2,100,000. Number 44 ( DIFFERENTIAL COSTS ANALYSIS) Chiron Corporation produces three joint products, X, Y, and Z, form one input. The products can be sold at the split-off point or processed further. The joint production costs for the month, allocated among the products based on the relative physical volume of output, are as follows: Materials P150,000 Labor 30,000 Factory overhead 20,000 Total joint costs P200,000 Additional information about the three products are given in the following tabulation: Production UNIT SALES PRICE Additional in Units At Split-ofIf Processed Further Processing Cost Product X 5,000 P80 P100 P15 Product Y 3,000 45 60 20 Product Z 2,000 60 75 10 How much is the total gross profit if the company took the most profitable action with respect to each of the three products? A. 690,000 B. 430,000 C. 535,000 D. 490,000 Numbers 45 and 46 ( DIFFERENTIAL COSTS ANALYSIS) Grover Corporation produces cellular phone Grovers. Each Grover requires a keypad which it also manufactures at a cost of P20 per unit, inclusive of fixed overhead cost of P5.
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