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Mech War Systems Philippines is in the business of making missiles for the Philippine Army. Its newest model, an air-to-surface missile called the PH-170, is priced at P285,000 per unit and costs P60,

Answer 1

Answer: 4.356

Explanation: To calculate the break-even point for Mech War Systems, we need to consider the fixed costs and the contribution margin per unit.

Total fixed costs = rent + wages + taxes

Total fixed costs = P200, 000 + P700, 000 + P80000

Total fixed costs = P980, 000

Next,

Contribution Margin per Unit = Selling Price - Variable Cost per Unit

Contribution Margin per Unit = P285, 000 - P60, 000

Contribution Margin per Unit = P225, 000

To find the break-even point in units, divide the total fixed costs by the contribution margin per unit:

Break-even point = Total fixed costs / Contribution margin per unit

Break-even point = P980, 000 / P225, 000

Break-even point = 4.356

The break-even point for Mech War Systems is approximately 4.356 units. Since we cannot sell a fraction of a unit, we would need to round up to the nearest whole number. Therefore, Mech War Systems should sell at least 5 missile units to break even.