Question
In: Accounting
In 2013, Granny Co. has sales of P800,000, flexible (variable) costs of P200,000, and Capaciity-related (fixed)...
In 2013, Granny Co. has sales of P800,000, flexible (variable)
costs of P200,000, and Capaciity-related (fixed) costs of P300,000.
In 2014, Granny Co. expects annual property taxes to decrease by
P15,000.
a. Calculate operating income and the breakeven point for
2013.
b. Calculate the breakeven point for 2014.
Solutions
Expert Solution
- All working forms part of the answer
- Requirement ‘a’
--Operating Income for 2013
|
A |
Sales |
P 800,000.00 |
|
B |
Variable cost |
P 200,000.00 |
|
C = A - B |
Contribution margin |
P 600,000.00 |
|
D |
Fixed Cost |
P 300,000.00 |
|
E = C - D |
Operating Income |
P 300,000.00 |
--2013’s Break Even point
|
A |
Contribution margin |
P 600,000.00 |
|
B |
Sales |
P 800,000.00 |
|
C = (A/B) x 100 |
CM Ratio |
75% |
|
D |
Fixed Cost |
P 300,000.00 |
|
E = D/C |
Break Even point |
P 400,000.00 |
- Requirement ‘b’
|
A = 300000 - 15000 |
2014's Fixed Cost |
P 285,000.00 |
|
B |
CM Ratio |
75% |
|
C = A/B |
2014's Break Even point |
P 380,000.00 |
ekkarill92 answered 1 year agoRelated Solutions
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