A company uses 1,500 units of Zeron per year. Each unit has an invoice cost of P222, including shipping costs. Because of the volatile nature of Zeron, it costs P860 for liability insurance on each shipment. The costs of carrying the inventory amount to P65 per item per year exclusive of a 20 percent cost of capital. Other order costs amounts to P18 per order. At present, the company orders 250 units at a time. What is the annual cost of the company's current order policy?
1. A company uses 1,500 units of Zeron per year. Each unit has an invoice cost of P222, including shipping costs. Because of the volatile nature of Zeron, it costs P860 for liability insurance on each shipment. The costs of carrying the inventory amount to P65 per item per year exclusive of a 20 percent cost of capital. Other order costs amounts to P18 per order. At present, the company orders 250 units at a time. What is the annual cost of the company's current order policy?
2. Summer Company has annual fixed costs of P90,000. This year, it recorded profit of P30,000 which is 10% of its sales. In the coming year, sales volume is expected to increase by P200,000 and the profit ratio will go up to 22%. What is Summer's break even sales ratio in the coming year?
3. Corporation C is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for P133.60 per unit.
Sales volume (units) 4,000 5,000
Cost of sales P383,600 P479,500
SGA costs 124,400 136,000
The best estimate of the total contribution margin when 4,300 units are sold is:
b. P162,110
c. P28,380
a. P112,230
d. P45,150
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