NUBD Manufacturing is considering dropping a product line. It currently produces a multipurpose woodworking clamp in a simple manufacturing process that uses special equipment. Variable costs amount to P6.00 per unit. Fixed factory overhead costs, exclusive c depreciation, have been allocated to this product at a rate of P3.50 a unit and will continue whether or not production ceases. Depreciation on the special equipment amounts to P20,000 a year. If production of the clamp is stopped, the special equipment can be sold for P30,000; if production continues, however, the equipment will be useless for further production at the end of one year and will have no salvage value. The clamp has a unit sales price of P10. Ignoring income tax effects, the minimum number of units that would have to b sold in the current year to make it worthwhile to keep the equipment (on a cash-flow basis) is Do not use money sign. Sample format: 1,111

NUBD Manufacturing is considering dropping a product line. It currently produces a multipurpose woodworking clamp in a simple manufacturing process that uses special equipment. Variable costs amount to P6.00 per unit. Fixed factory overhead costs, exclusive c depreciation, have been allocated to this product at a rate of P3.50 a unit and will continue whether or not production ceases. Depreciation on the special equipment amounts to P20,000 a year. If production of the clamp is stopped, the special equipment can be sold for P30,000; if production continues, however, the equipment will be useless for further production at the end of one year and will have no salvage value. The clamp has a unit sales price of P10. Ignoring income tax effects, the minimum number of units that would have to b sold in the current year to make it worthwhile to keep the equipment (on a cash-flow basis) is Do not use money sign. Sample format: 1,111

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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NUBD Manufacturing is considering dropping a product line. It currently produces a multipurpose woodworking clamp in a simple manufacturing process that uses special equipment. Variable costs amount to P6.00 per unit. Fixed factory overhead costs, exclusive of depreciation, have been allocated to this product at a rate of P3.50 a unit and will continue whether or not production ceases. Depreciation on the special equipment amounts to P20,000 a year. If production of the clamp is stopped, the special equipment can be sold for P30,000; if production continues, however, the equipment will be useless for further production at the end of one year and will have no salvage value. The clamp has a unit sales price of P10. Ignoring income tax effects, the minimum number of units that would have to be sold in the current year to make it worthwhile to keep the equipment (on a cash-flow basis) is:
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