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Due to the coronavirus pandemic, ShakeHands Company announced a decision to close a factory located in Sampaloc and terminate all 200 employees as a result of the decline in product demand due to the lockdown.   The entity shall pay P40,000 per employee upon termination. However, to ensure that the windup of the factory occurs smoothly and all remaining customer orders are completed, the entity needs to retain at least 20% of employees until closure of the factory in six months.   As a result, the entity announced that employees who agree to stay until the closing of the factory shall receive P75,000 payment at the end of the six months in addition to receiving their current wage through the period of closure on top of the P40,000. Based on this offer, the entity expected to retain 50 employees until the factory is closed.     Compute the amount attributable to termination benefit.   Compute the amount attributable to short-term benefit.

Due to the coronavirus pandemic, ShakeHands Company announced a decision to close a factory located in Sampaloc and terminate all 200 employees as a result of the decline in product demand due to the lockdown.   The entity shall pay P40,000 per employee upon termination. However, to ensure that the windup of the factory occurs smoothly and all remaining customer orders are completed, the entity needs to retain at least 20% of employees until closure of the factory in six months.   As a result, the entity announced that employees who agree to stay until the closing of the factory shall receive P75,000 payment at the end of the six months in addition to receiving their current wage through the period of closure on top of the P40,000. Based on this offer, the entity expected to retain 50 employees until the factory is closed.     Compute the amount attributable to termination benefit.   Compute the amount attributable to short-term benefit.

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management analysis
Section: Chapter Questions
Problem 2PA: The demand for solvent, one of numerous products manufactured by Logan Industries Inc., has dropped...
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Due to the coronavirus pandemic, ShakeHands Company announced a decision to close a factory located in Sampaloc and terminate all 200 employees as a result of the decline in product demand due to the lockdown.
 
The entity shall pay P40,000 per employee upon termination. However, to ensure that the windup of the factory occurs smoothly and all remaining customer orders are completed, the entity needs to retain at least 20% of employees until closure of the factory in six months.
 
As a result, the entity announced that employees who agree to stay until the closing of the factory shall receive P75,000 payment at the end of the six months in addition to receiving their current wage through the period of closure on top of the P40,000. Based on this offer, the entity expected to retain 50 employees until the factory is closed.
 
 
Compute the amount attributable to termination benefit.
 
Compute the amount attributable to short-term benefit.
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