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What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity?

What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity?

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter9: Responsibility Accounting And Decentralization
Section: Chapter Questions
Problem 8EA: Using the information in the previous exercises about Marleys Manufacturing, determine the operating...
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Davao has a potential foreign customer that has offered to buy 1,500 tons at
P450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity?

 

Questions 5 to 8 are based on the Statement of Income of Davao, Inc. which represents the operating results for the current fiscal year ending December 31. Davao had sales of 1,800 tons of product during the current year. The manufacturing capacity of Davao's facilities is 3,000 tons of product. Consider each question's situation separately. Sales P900,000 Variable costs Manufacturing Selling costs 180,000 Total variable costs P495,000 Contribution margin P405,000 P315,000 Fixed costs P 90,000 Manufacturing Selling Administration Total fixed costs Net income before income taxes P157,500 Income taxes (40%)(63,000) Net income after income taxes 112,500 45.000 P247,500 P 94,500
Transcribed Image Text:Questions 5 to 8 are based on the Statement of Income of Davao, Inc. which represents the operating results for the current fiscal year ending December 31. Davao had sales of 1,800 tons of product during the current year. The manufacturing capacity of Davao's facilities is 3,000 tons of product. Consider each question's situation separately. Sales P900,000 Variable costs Manufacturing Selling costs 180,000 Total variable costs P495,000 Contribution margin P405,000 P315,000 Fixed costs P 90,000 Manufacturing Selling Administration Total fixed costs Net income before income taxes P157,500 Income taxes (40%)(63,000) Net income after income taxes 112,500 45.000 P247,500 P 94,500
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