Reference no: EM132960148

The contribution margin of the Man's Store for the month of November 2019 is shown below:

Man's Store
Contribution Margin Income Statement
November 2019

Sales Revenue P60,000
Variable Expenses:
Cost of goods sold P22,000
Selling 13,000
Gen. and Administrative 7,000 42,000
Contribution margin P18,000
Fixed Expenses:
Selling P11,000
Gen. and Administrative 3,000 14,000
Operating income P4,000

The company sells two of ties for every belt. The ties sell for P7, with a variable expense of P4.90 per unit. The belts sell for P6, with a variable unit cost of P4.20.

Required:

Problem 1. Determine the Man's Store monthly breakeven point in the number of ties and belts. Prove the correctness of your computation by preparing a summary contribution margin income statement at breakeven. Show only two categories of expenses: variable and fixed

Problem 2. Compute for the margin of safety in pesos.

Problem 3. Suppose that the company increases monthly sales by 15% above the P60,000. Compute for the operating income.

Problem 4. Suppose the company expand the store and increases monthly fixed expenses by P4,800. Use the contribution margin approach to determine the new breakeven sales in pesos.