Ma-De Corporations's Store No. 10 reported the following results of operations for the period just ended: Sales P2,500,000 Less: Variable expenses 1,000,000 Contribution margin P1,500,000 Less: Fixed expenses Salaries and wages P750,000 Insurance on inventories 50,000 Depreciation of 325,000 equipment 500,000 1,625,000 Advertising
Ma-De Corporations's Store No. 10 reported the following results of operations for the period just ended: Sales P2,500,000 Less: Variable expenses 1,000,000 Contribution margin P1,500,000 Less: Fixed expenses Salaries and wages P750,000 Insurance on inventories 50,000 Depreciation of 325,000 equipment 500,000 1,625,000 Advertising
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Ma-De Corporations's Store No. 10 reported the following results of
operations for the period just ended:
Sales
P2,500,000
Less: Variable expenses
1,000,000
Contribution margin
P1,500,000
Less: Fixed expenses
Salaries and wages
P750,000
Insurance on inventories
50,000
Depreciation of
325,000
equipment
500,000
1,625,000
Advertising
Net income (loss)
P(125,000)
Transcribed Image Text:325,000
equipment
500,000
1,625,000
Advertising
Net income (loss)
P(125,000)
The management is contemplating the dropping of Store No. 10 due to the
unfavorable operational results. if this would happen, one employee would
have to be retained with an annual salary of P150,000. The equipment has no
resale value. Store No. 10 should:
O not be dropped due to foregone overall income of P350,000
O not be dropped due to foregone overall income of P25,000
O be dropped due to overall operational loss of P325,000
O be dropped due to overall operational loss of P25,000
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