Mr. Josh Kho, the operations manager of Achos Merchandising Corp. Is worried about the result of its operation this year. Although the accounting dept. has not submitted the financial statements yet, the following data where already availablepertaining to year 2020. Total number of units sold at P50 per unit price120,000 unitsTotal fixed costs and expensesP1,600,000Variable cost rate60% Because of other pressing problems, he hired you to give him information and computation that will help him plan for the next year operation. He specifically wants the following (with proofs, if possible): If management wants 15% profit from sales, how many units should the company sells? What is the degree of operating leverage (DOL)? If management projects that sales will reduce by 10% next year, what is the percentage decrease in profit?If the selling price per unit next year is reduced by 10% and an increase in variable cost per unit by 5% due to the increase in the price of the supplier but this will result in increase in quantity sold next year by 50%. What would be the result of the operation? (use the contribution margin format)thumbs down will be given if all questions are not answered

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Answered: statements

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 1PB: Variety Artisans has a bottleneck in their production that occurs within the engraving department....

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Mr. Josh Kho, the operations manager of Achos Merchandising Corp. Is worried about the result of its operation this year. Although the accounting dept. has not submitted the financial statements yet, the following data where already available

pertaining to year 2020.
Total number of units sold at P50 per unit price	120,000 units
Total fixed costs and expenses	P1,600,000
Variable cost rate	60%

Because of other pressing problems, he hired you to give him information and computation that will help him plan for the next year operation. He specifically wants the following (with proofs, if possible):

If management wants 15% profit from sales, how many units should the company sells?
What is the degree of operating leverage (DOL)? If management projects that sales will reduce by 10% next year, what is the percentage decrease in profit?
If the selling price per unit next year is reduced by 10% and an increase in variable cost per unit by 5% due to the increase in the price of the supplier but this will result in increase in quantity sold next year by 50%. What would be the result of the operation? (use the contribution margin format)

thumbs down will be given if all questions are not answered

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