A Sales Revenues P100,000 (20,000) 80,000 P150,000 Variable Costs Contribution Margin (50,000) 100,000 (45,000) 55,000 (60,000) (P5,000) Direct Fixed Cost (30,000) 50,000 (40,000) Segment Margin Common Cost Operating Income P10,000

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter11: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 11.16E
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How much would be the net effect on the total segment profit if product B is dropped and discontinued?

 

Assume that by dropping product B, product A would increase A's sales by 80%. How much would be the net effect on the total segment profit?

 

Assume that by dropping product B, product A would decrease A's sales by 20%. Moreover, 30,000 of common costs allocated are avoidable. How much would be the net effect on the total segment profit?

A
В
Sales Revenues
P100,000
P150,000
Variable Costs
Contribution Margin
(20,000)
80,000
(30,000)
(50,000)
100,000
(45,000)
55,000
Direct Fixed Cost
|Segment Margin
50,000
Common Cost
(40,000)
(60,000)
(P5,000)
Operating Income
P10,000
Transcribed Image Text:A В Sales Revenues P100,000 P150,000 Variable Costs Contribution Margin (20,000) 80,000 (30,000) (50,000) 100,000 (45,000) 55,000 Direct Fixed Cost |Segment Margin 50,000 Common Cost (40,000) (60,000) (P5,000) Operating Income P10,000
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