What is the correct answer to the question? Z Company plans to discontinue adepartment with the following averagemonthly operating results:Sales120,000.00Variable costs70,000.00Contribution Margin50,000.00Fixed Costs80,000.00Operating lossPP30,000.00If the department is discontinued,P35,000.00 of the fixed costs could beeliminated.O Decrease of P15,000.00O Increase of P15,000.00Increase of P5,000.00Decrease of P5,000.00Question: What would be the effect ofthe discontinuance of the departmenton Z Company's profit before tax?

Lets understand the basics. In cost accounting, management needs to choose between various…

Z Company plans to discontinue a department with the following average monthly operating results: Sales 120,000.00 Variable costs 70,000.00 Contribution Margin 50,000.00 Fixed Costs 80,000.00 Operating loss 30.000.00 P P P

Z Company plans to discontinue a department with the following average monthly operating results: Sales 120,000.00 Variable costs 70,000.00 Contribution Margin 50,000.00 Fixed Costs 80,000.00 Operating loss 30.000.00 P P P

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 12MC: Youngstown Construction plans to discontinue its rooting segment. Last year, this segment generated...

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Question

What is the correct answer to the question?

Z Company plans to discontinue a
department with the following average
monthly operating results:
Sales
120,000.00
Variable costs
70,000.00
Contribution Margin
50,000.00
Fixed Costs
80,000.00
Operating loss
P
P
30,000.00
If the department is discontinued,
P35,000.00 of the fixed costs could be
eliminated.
O Decrease of P15,000.00
O Increase of P15,000.00
Increase of P5,000.00
Decrease of P5,000.00
Question: What would be the effect of
the discontinuance of the department
on Z Company's profit before tax?

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