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The manager of Q Corporation is recommendir the closure of Branch B in order to eliminate its

The manager of Q Corporation is recommendir the closure of Branch B in order to eliminate its

FINANCIAL ACCOUNTING
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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The manager of Q Corporation is recommending the closure of Branch B in order to eliminate its net loss of P33,750. The income statement shows: Sales Cost of sales Operating expenses directly related to sales Operating expenses indirectly related to sales General & administrative expenses allocated Total costs & expenses Operating income Home Branch Branch Office A B P800,000 P300,000 P500,000 P400,000 P120,000 P250,000 80,000 30,000 80,000 90,000 20,000 110,000 150,000 56,250 93,750 P720,000 P226,250 P533,750 P80,000 P73,750 P(33,750) If Branch B is closed, one personnel (with salary of P30,000) have to be transferred to the home office. Branch B has furniture costing P120,000 and with an estimated useful life of 5 years has to be transferred also to the home office. REQUIRED: 1. Do you agree with the manager? Explain.
Transcribed Image Text:The manager of Q Corporation is recommending the closure of Branch B in order to eliminate its net loss of P33,750. The income statement shows: Sales Cost of sales Operating expenses directly related to sales Operating expenses indirectly related to sales General & administrative expenses allocated Total costs & expenses Operating income Home Branch Branch Office A B P800,000 P300,000 P500,000 P400,000 P120,000 P250,000 80,000 30,000 80,000 90,000 20,000 110,000 150,000 56,250 93,750 P720,000 P226,250 P533,750 P80,000 P73,750 P(33,750) If Branch B is closed, one personnel (with salary of P30,000) have to be transferred to the home office. Branch B has furniture costing P120,000 and with an estimated useful life of 5 years has to be transferred also to the home office. REQUIRED: 1. Do you agree with the manager? Explain.
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