M Department Store has 5 departments- M1, M2, МЗ, М4, and М5 Department M5 is being evaluated using the data below for the store. Dept, M5 P500,000 300,000 P200,000 P200,000 50,000 50,000 Р300,000 All Others Total Sales Cost of Sales P4,500,000 2,200,000 P2,300,000 P800,000 450,000 450,000 P1,700,000 P600,000 P5,000,00 2,500,00 P2,500,00 P1,000,00 500,00 Gross Profit Rent and services Direct salaries Advertising allocation Total expenses Net income 500,0 P2,000,0 P500,0 P(100,000) Rent and services is a corporate committed fixed expense and is alloca evenly to the five departments. Advertising will not change regardless of decision, and is allocated using sales revenue. M Department Store is evaluating Department M5's future. REQUIRED: 1. Comment on the following statements about Department M5: a. It is earning P100,000 in variable CM for M Department Store. b. It is earning P150,000 in direct CM for M Department Store. c. It is a P100,000 drain on the profitability of M Department Store. d The company's overall profitability without Department M5 would be P600

M Department Store has 5 departments- M1, M2, МЗ, М4, and М5 Department M5 is being evaluated using the data below for the store. Dept, M5 P500,000 300,000 P200,000 P200,000 50,000 50,000 Р300,000 All Others Total Sales Cost of Sales P4,500,000 2,200,000 P2,300,000 P800,000 450,000 450,000 P1,700,000 P600,000 P5,000,00 2,500,00 P2,500,00 P1,000,00 500,00 Gross Profit Rent and services Direct salaries Advertising allocation Total expenses Net income 500,0 P2,000,0 P500,0 P(100,000) Rent and services is a corporate committed fixed expense and is alloca evenly to the five departments. Advertising will not change regardless of decision, and is allocated using sales revenue. M Department Store is evaluating Department M5's future. REQUIRED: 1. Comment on the following statements about Department M5: a. It is earning P100,000 in variable CM for M Department Store. b. It is earning P150,000 in direct CM for M Department Store. c. It is a P100,000 drain on the profitability of M Department Store. d The company's overall profitability without Department M5 would be P600

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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