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Branch No. 1 should a. not be dropped due to foregone over-all income of P 350,000. b. be dropped due to over-all operating loss of P 325,000 c. not be dropped due to foregone overall income of P 25,000. d. be dropped due to over-all operating loss of P 25,000.

Branch No. 1 should a. not be dropped due to foregone over-all income of P 350,000. b. be dropped due to over-all operating loss of P 325,000 c. not be dropped due to foregone overall income of P 25,000. d. be dropped due to over-all operating loss of P 25,000.

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter12: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 1SEQ: Mario Company is considering discontinuing a product. The costs of the product consist of $20,000...
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Branch No. 1 should

a. not be dropped due to foregone over-all income of P 350,000.
b. be dropped due to over-all operating loss of P 325,000

c. not be dropped due to foregone overall income of P 25,000.
d. be dropped due to over-all operating loss of P 25,000.



The management of BB Company is contemplating to discontinue the operations of branch 1 due to its unfavorable operating results last year as shown below. Contribution margin P 1,500,000 Less: Fixed costs: P 750,000 500,000 Depreciation of equipment 325,000 50,000 Salaries Advertising Rent 1,625,000 (P 125,000) Net profit If this branch would be closed, one employee would have to be retained with an annual salary of P 150,000. Branch No. 1 should
Transcribed Image Text:The management of BB Company is contemplating to discontinue the operations of branch 1 due to its unfavorable operating results last year as shown below. Contribution margin P 1,500,000 Less: Fixed costs: P 750,000 500,000 Depreciation of equipment 325,000 50,000 Salaries Advertising Rent 1,625,000 (P 125,000) Net profit If this branch would be closed, one employee would have to be retained with an annual salary of P 150,000. Branch No. 1 should
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