Illustration (Shut down) A Company manufactures 3 products. The present annual income from these are as follows: Y Total Sales 50,000 40,000 60,000 150,000 Variable Cost 30,000 25,000 35,000 90,000 Contribution 20,000 15,000 25,000 60,000 Fixed Cost 17,000 18,000 20,000 55,000 Profit/Loss 3,000 (3000) 5,000 5,000 The company is concerned about its performance and its considering whether or not to cease selling Y. It is felt that selling prices cannot be raised or lowered without adversely affecting net income. GHC5000 of the fixed cost of Y are directly fixed and will be saved if production cease. All other fixed costs is considered to remain the same. Required Consider whether Y should be closed.

Illustration (Shut down) A Company manufactures 3 products. The present annual income from these are as follows: Y Total Sales 50,000 40,000 60,000 150,000 Variable Cost 30,000 25,000 35,000 90,000 Contribution 20,000 15,000 25,000 60,000 Fixed Cost 17,000 18,000 20,000 55,000 Profit/Loss 3,000 (3000) 5,000 5,000 The company is concerned about its performance and its considering whether or not to cease selling Y. It is felt that selling prices cannot be raised or lowered without adversely affecting net income. GHC5000 of the fixed cost of Y are directly fixed and will be saved if production cease. All other fixed costs is considered to remain the same. Required Consider whether Y should be closed.

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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