NUBD Co. has been incurring losses in the past years during the third quarter of the year. Management is considering to shutdown operations during this period to avoid continued losses. Allocated fixed operational monthly costs were determined from the records amount t P60,000. Average monthly sales during the year except the third quarter are 10,000 units. The company averages only 2,500 units monthly during the third quarter. Units are sold at a price of P30 each. Variable costs to produce and sell the units are P18 per unit. If management decides to shutdown operations they would save on allocated fixed costs 40%, but will incur additional shutdown costs of P4,000 per month. What would be the advantage of continued operations? *

NUBD Co. has been incurring losses in the past years during the third quarter of the year. Management is considering to shutdown operations during this period to avoid continued losses. Allocated fixed operational monthly costs were determined from the records amount t P60,000. Average monthly sales during the year except the third quarter are 10,000 units. The company averages only 2,500 units monthly during the third quarter. Units are sold at a price of P30 each. Variable costs to produce and sell the units are P18 per unit. If management decides to shutdown operations they would save on allocated fixed costs 40%, but will incur additional shutdown costs of P4,000 per month. What would be the advantage of continued operations? *

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter18: Cost-volume-profit Analysis (cvp)

Section: Chapter Questions

Problem 1R: Poleski Manufacturing, which maintains the same level of inventory at the end of each year, provided...

See similar textbooks

Similar questions

Lusk Corporation produces and sells 14,700 units of Product X each month. The selling price of Product X is $29 per unit, and variable expenses are $23 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $73,000 of the $102,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the monthly financial advantage (disadvantage) for the company of eliminating this product should be: Multiple Cholce ($59.200 $13.800 $42,800 ($42,800)
NUBD Co. has been incurring losses in the past years during the third quarter of the year. Management is considering to shutdown operations during this period to avoid continued losses. Allocated fixed operational monthly costs were determined from the records amount to P60,000. Average monthly sales during the year except the third quarter are 10,000 units. The company averages only 2,500 units monthly during the third quarter. Units are sold at a price of P30 each. Variable costs to produce and sell the units are P18 per unit. If management decides to shutdown operations they would save on allocated fixed costs 40%, but will incur additional shutdown costs of P4,000 per month. What would be the advantage of continued operations?
The E&G Company has been incurring losses in the past years during the third quarter of the year. Management is considering shutting down operations during this period to avoid continued losses. Allocated fixed operational monthly costs were determined from records amount to 50,000. Average monthly sales during the year except the third quarter are 10,000 units. The company averages only 3,000 units monthly during the third quarter. Units are sold at a price of 30 each. Variable cost to produce and sell the units are 18 per unit. If management decides to shut down operations they would save on allocated fixed costs of 40% but will incur additional shutdown costs of 5,000 per month. What would be the advantage of continued operations?A. 33,000B. 30,000C. 40,000D. 35,000
Theodore Co. has been incurring losses in the past years during the third quarter of the year. Management is considering to shutdown operations during this period to avoid continued losses. Allocated fixed operational monthly costs were determined from the records amount to P60,000. Average monthly sales during the year except the third quarter are 10,000 units. The company averages only 2,500 units monthly during the third quarter. Units are sold at a price of P30 each. Variable costs to produce and sell the units are P18 per unit. If management decides to shutdown operations they would save on allocated fixed costs 40%, but will incur additional shutdown costs of P4,000 per month. What would be the advantage of continued operations?
Lusk Corporation produces and sells 14,300 units of Product X each month. The selling price of Product X is $25 per unit, and variable expenses are $19 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $72,000 of the $102,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the monthly financial advantage (disadvantage) for the company
Phan Company has not reported a profit in five years. This year the company would like to narrow its loss to $7,500. Assuming its selling price is $36.50 per unit and its variable costs per unit are $24, how many units must be sold to achieve its target given that total fixed costs are $60,000?
For the past year, LaPrade Company had fixed costs of $70,000, a unit variable costs of $32, and a unit selling price of $40. For the coming year, no changes are expected in revenues and costs except that property taxes are expected to increase by $10,000. a. Determine the break-even sales (in units) for the past year.fill in the blank 1 units b. Determine the break-even sales (in units) for the coming year.fill in the blank 2 units
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
Astro Co. sold 19,800 units of its only product and incurred a $48,292 loss (ignoring taxes) for the current year, as shown here. During a planning session for year 2020’s activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $148,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANYContribution Margin Income StatementFor Year Ended December 31, 2019 Sales $ 738,540 Variable costs 590,832 Contribution margin 147,708 Fixed costs 196,000 Net loss $ (48,292 ) Compute the sales level required in both dollars and units to earn $180,000 of target pretax income in 2020 with the machine installed and no change in unit sales price Sales level required in dollars Choose Numerator: / Choose Denominator: = Sales Dollars…
Astro Co. sold 19,800 units of its only product and incurred a $48,292 loss (ignoring taxes) for the current year, as shown here. During a planning session for year 2020’s activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $148,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANYContribution Margin Income StatementFor Year Ended December 31, 2019 Sales $ 738,540 Variable costs 590,832 Contribution margin 147,708 Fixed costs 196,000 Net loss $ (48,292 ) Prepare a forecasted contribution margin income statement for 2020 that shows the expected results with the machine installed. Assume that the unit selling price and the number of units sold will not change, and no income taxes will be due. ASTRO COMPANY Forecasted…
[The following information applies to the questions displayed below.] Astro Company sold 22,500 units of its only product and reported income of $60,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 45% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $155,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($55 per unit) Variable costs ($50 per unit) Contribution margin Fixed costs Income 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal places.) Contribution margin Contribution Margin Ratio Numerator: Contribution margin per unit $ 1 Fixed costs per unit $ 1,237,500 1,125,000 112,500 52,500 $ 60,000 $ Denominator: Selling price…
Astro Co. sold 19,800 units of its only product and incurred a $48,292 loss (ignoring taxes) for the current year, as shown here. During a planning session for year 2020’s activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $148,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANYContribution Margin Income StatementFor Year Ended December 31, 2019 Sales $ 738,540 Variable costs 590,832 Contribution margin 147,708 Fixed costs 196,000 Net loss $ (48,292 ) Compute the predicted break-even point in dollar sales for 2020 assuming the machine is installed and there is no change in the unit selling price. (Round to 2 decimal places.) Contribution Margin per unit Proposed $0.00…