1.

Fixed cost = P 1,700 per month

Variable cost = P0.25
Cost per unit = P1.1

Monthly volume = P1,700 / (P1.1- 0.25)

= 2,000

2. The P16,000 cost of new machinery will increase for the next 36 months. This will
increase the fixed cost by P450. It comes to P2,150 each month in total.

=P2,150 / (1.1- 0.25) - 2,000

= 529.412

To break even, Molly would have to clean 529 things in a month.

3. During next three years.

Profit = Total Revenue- Total Cost
Total Revenue= P4,300 x P1.1
=P4,730

Total Cost= P1,700 + (16,000/36 mos.) + P4,300 x P0.25

=2,150 + 1,075
=P3,225

Profit = Total Revenue - Total Cost

=P4,730 – P3,225
=P1,505

a. After three years.

Total Revenue= P4,300 x P1.1
= P4,730

Total Cost = P1,700 + (P4,300 x PO.25)

= P1,700 + 1,075
= P 2,775

Profit = Total Revenue - Total Cost

= P4,730 - P2,775
=P1,955
 4. Fixed cost = P 1,700 per month
Variable cost = P0.25
Cost per unit = P0.99
cf
υ=
p−c v

=P1,700 / (0.99 – 0.25)

= P2,297.30
Profit = Total Revenue - Total Cost
=3,762 – 2,650
=1,112
5. Molly shouldn't purchase the equipment because the profit has decreased.