WalangLabel Company is a liquor company, the business has not been performing well this last few months due to the liquor ban imposed by the government. Thecompany is considering whether it should shutdown temporarily for three months. The selling price and other costs of operating are presented below:Selling priceP500Variable manufacturing costsP280 per unitVariable selling costsP60 per unitMonthly Fixed costs:Manufacturing costsP250,000Selling costsP120,000Administrative costsP125,000If the company will temporarily close it would incur P150,000 in retrenchment costs and P80,000 in reopening costs. Manufacturing costs and selling cost would notbe incurred and administrative costs of P50,000 would be avoided per month if they decide to shut down. The company expects to sell 100 units per month if itwould continue to operate.What is the shutdown point in sales?

The manufacturing cost is the total cost of all resources used in the manufacture of a product. The…

wn temporarily for three months. The selling price and other c 00 -280 per unit -60 per unit 50,000 20,000 25,000 ur P150,000 in retrenchment costs and P80,000 in reopening would be avoided per month if they decide to shut down. The

wn temporarily for three months. The selling price and other c 00 -280 per unit -60 per unit 50,000 20,000 25,000 ur P150,000 in retrenchment costs and P80,000 in reopening would be avoided per month if they decide to shut down. The

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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Question

WalangLabel Company is a liquor company, the business has not been performing well this last few months due to the liquor ban imposed by the government. The
company is considering whether it should shutdown temporarily for three months. The selling price and other costs of operating are presented below:
Selling price
P500
Variable manufacturing costs
P280 per unit
Variable selling costs
P60 per unit
Monthly Fixed costs:
Manufacturing costs
P250,000
Selling costs
P120,000
Administrative costs
P125,000
If the company will temporarily close it would incur P150,000 in retrenchment costs and P80,000 in reopening costs. Manufacturing costs and selling cost would not
be incurred and administrative costs of P50,000 would be avoided per month if they decide to shut down. The company expects to sell 100 units per month if it
would continue to operate.
What is the shutdown point in sales?

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