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A firm contemplates to drop a segment that shows a contribution margin of P25,000. Overhead allocated to the segment amounts to P40,000 of which P17,500 cannot be eliminated. What is the effect of this discontinuance on the company’s profit before tax? (Indicate if increase or decrease, e.g. “2,000 increase” or “2,000 d

A firm contemplates to drop a segment that shows a contribution margin of P25,000. Overhead allocated to the segment amounts to P40,000 of which P17,500 cannot be eliminated. What is the effect of this discontinuance on the company’s profit before tax? (Indicate if increase or decrease, e.g. “2,000 increase” or “2,000 d

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A firm contemplates to drop a segment that shows a contribution margin of P25,000. Overhead allocated to the segment amounts to P40,000 of which P17,500 cannot be eliminated. What is the effect of this discontinuance on the company’s profit before tax? (Indicate if increase or decrease, e.g. “2,000 increase” or “2,000 decrease”)

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