AB Company is contemplating to temporary stop operating for the next 4 months since demand declines below the breakeven point. The company has a normal operating fixed costs of P50,000 per month and if they shut down they could eliminate P20,000 fixed costs per month, however, they would incur an additional costs for insurance for insurance and security guards for the entire shut down period of P25,000. They estimated that restarting costs will be P20,000. At present, they have a selling price of P50 per unit and a variable cost of P30. For the next 4 months they will be forced to reduce their selling price by P10. Based on these facts, determine: Shut down costs Shut down savings Shut down point

AB Company is contemplating to temporary stop operating for the next 4 months since demand declines below the breakeven point. The company has a normal operating fixed costs of P50,000 per month and if they shut down they could eliminate P20,000 fixed costs per month, however, they would incur an additional costs for insurance for insurance and security guards for the entire shut down period of P25,000. They estimated that restarting costs will be P20,000. At present, they have a selling price of P50 per unit and a variable cost of P30. For the next 4 months they will be forced to reduce their selling price by P10. Based on these facts, determine: Shut down costs Shut down savings Shut down point

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 1PB: Variety Artisans has a bottleneck in their production that occurs within the engraving department....

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