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TROPA Company manufactures and sells a single product. The companys sales and expenses for the month of January 2021 are as follows: Sales ( 1500 units) P375,000; Variable costs P150,000; Fixed Costs P150,000. (20 points)

Required:

For profit planning purposes, compute the

1. Contribution margin ratio
2. Break-even peso sales
3. Break-even points in units
4. What unit sales are required to earn P60,000 profit for the month?

1. Type of Costs

	Type of Costs
	In relation to volume of activity	In relation to the product/service
1. Annual property insurance of P30,000.
2. Annual depreciation expense is determined at P175,000 for an estimated useful life of 20 years.
3. The center provides lunch and two (morning and afternoon) snacks for the children. The cost of the meal and snack is P120 per child. The center has currently 10 children as regular customers per day.
4. The center employed once staff with a daily rate of P350.
5. The utility costs when the center is not yet operational is at P300. Average utility costs per month during the first year of operation is at P4,000.

2. Identify the sunk costs in the case and briefly discuss why they are considered sunk costs. ( 5 points).
3. If you are the accountant, what alternative will you select for the laundry needs of the center. Show your supporting computations ( in an annual basis) for a) Self-serve laundry b) Pick- up/Delivery Service c) Purchase Appliances ( 15 points)
4. 1. SELF -SERVE LAUNDRY

Description/Account Title	Supporting Computation in Parenthetical Form	Amount

2. Pick up / Delivery

3. Purchase Appliances

4. Compute for the Net Income/Loss of the center assuming they will purchase the dryer and washer. Assume that there is no parent who availed of the extended hours during the year. (15 points)
5. Compute for the Return on Investment (ROI) of the center using the Net Income determined in requirement no. 4. Do you think the retired couple's investment in the facility is a worthwhile one? ( 5 points)
6. The center has a wait list. They can hire another employee for a daily salary similar to that of the existing employee. With the additional employee, the center can accept three additional children. Should the center hire the additional employee? Show your detailed calculations. (5 points)

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