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LEARNING ACTIVITIES 1

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LEARNING ACTIVITIES 1. Beta Company produces and sells a single product. Its sales and expenses for the month follows. TOTAL PER UNIT Sales ( 200 @P 250) Less variable costs (200@P 150) Contribution margin Less fixed costs Net Loss P600,000 420.000 180,000 150.000 30.0000 P40 28 P 12 Required: a) Compute the break even point in units for this month b) How many units must be sold to have a profit of P50,000? Show proof. c) Supposing the sales manager proposes to decrease unit sales price by P 5, but such decrease in price will push sales to P 700,000, should the proposal be approved? Show proof to support your answer. d) Assuming the manager proposes to automate some of its operations so that its fixed costs will increase by P 50,000 to P 200,000, but its variable cost will be reduced by P 5 per unit or P 23 per unit, should the proposal be favorably acted upon? Show proof to support your answer. e) Supposing the manager proposes to increase advertising expenses by P 30,000, but such expense will result in increase sales of P 100,000, should it be approved? Show proof 2. You are given the income statement of Delta Company for the year ending 31 December 2000, and are asked to compute for the break-even point sales: