Walastik Company makes and sells a popular household product and its annual sales average 14,000 units at P 65 each . Details of unit cost are as follows: Direct materials P 15 Direct labor 13 Variable Overhead 9 Fixed Overhead 8 Total 45 Annual fixed administrative and selling expenses, P 65,000 ; variable selling expenses per unit , P 8. Sales depend mostly on customers traveling along road in front of the company, but because of road construction which will take three months to complete, sale are expected to go down to 1,200 units during the construction period. Hence management plans to close for 3
Walastik Company makes and sells a popular household product and its annual sales average 14,000 units at P 65 each . Details of unit cost are as follows:
Direct materials P 15
Direct labor 13
Variable Overhead 9
Fixed Overhead 8
Total 45
Annual fixed administrative and selling expenses,
P 65,000 ; variable selling expenses per unit , P 8. Sales depend mostly on customers traveling along road in front of the company, but because of road construction which will take three months to complete, sale are expected to go down to 1,200 units during the construction period. Hence management plans to close for 3 months and avoid 60% of all fixed costs but additional shutdown costs of P10,500 will be incurred for security and minimum maintenance.
1. The total fixed costs and expenses for shutdown period is
2. The total shutdown cost is :
3. The shutdown point in units is
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