Six months after President Duterte signed the Rice Liberalization Law which allows private, foreign traders to import rice in the country without being subjected to price stabilization, Abuyog Rice Marketing, a local rice-producing enterprise, was forced to drop its selling price from P50 to P42 per kilo to compete with the imported rice in the market. It was shown in the income statement for the month of August 2017 that the enterprise sold 75 kilos of rice, net P81,900, with P48,516 cost of sales. Before the said law, for every P1 of sale the enterprise generates, it was earning C50.09. What are the implications of the tariffication law in relation to the profitability of the enterprise?

Six months after President Duterte signed the Rice Liberalization Law which allows private, foreign traders to import rice in the country without being subjected to price stabilization, Abuyog Rice Marketing, a local rice-producing enterprise, was forced to drop its selling price from P50 to P42 per kilo to compete with the imported rice in the market. It was shown in the income statement for the month of August 2017 that the enterprise sold 75 kilos of rice, net P81,900, with P48,516 cost of sales. Before the said law, for every P1 of sale the enterprise generates, it was earning C50.09. What are the implications of the tariffication law in relation to the profitability of the enterprise?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 11P

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