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1. What is the monthly break-even point in units sold and in sales pesos? 2. Without resorting to computations, what is the total contribution margin at your answer by preparing a contribution income statement at the target target profit of P18,000? Use the contribution margin method. Verify 4. Refer to the original data. Compute the company's margin of safety in 5. What is the company's CM ratio? If monthly sales increase by P80,000 and there is no change in fixed expenses, by how much would you expect 124 Chapter 4 Required: minimum the break-even point? 3. How many units would have to be sold each month to earn a level of sales. both peso and percentage terms. monthly net operating income to increase? Exercise 7 (Changes in Variable Costs, Fixed Costs, Selling Price, and Volume) Data for Rebby and David Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit P75 45 P30 Percent of Sales 100% 60% 40% Fixed expenses are P75,000 per month and the company is selling 3,000 units per month Required: 1. The marketing manager argues that an P8,000 increase in the monthly advertising budget would increase monthly sales by P15,000. Should the advertising budget be increased? 2. Refer to the original data. Management is considering using higher- quality components that would increase the variable cost by P3 per unit. The marketing manager believes the higher-quality product would increase sales by 15% per month. Should the higher-quality components

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