Merchandise Automotive Restaurant P 500,000 P 400,000 P 100,000 P1,000,000 70,000 50.000 (20,000). Total ales ariable Costs ixed Costs Operating Income (loss) 100,000 570,000 250.000 180.000 300,000 100.000 200,000 100.000 100.000 Management is contemplating on dropping the Restaurant division since appears to aperating at a loss. If this division is discontinued, P30,000 of its fixed costs will be eliminated. Furthermore, Merchandise and Automotive sales will decrease 5% from current levels. What is the effect on the overall profit if Newman's management will drop the Restau division? (Indicate the increase or decrease, if it is a decrease, use the " sign with SPACE)
Merchandise Automotive Restaurant P 500,000 P 400,000 P 100,000 P1,000,000 70,000 50.000 (20,000). Total ales ariable Costs ixed Costs Operating Income (loss) 100,000 570,000 250.000 180.000 300,000 100.000 200,000 100.000 100.000 Management is contemplating on dropping the Restaurant division since appears to aperating at a loss. If this division is discontinued, P30,000 of its fixed costs will be eliminated. Furthermore, Merchandise and Automotive sales will decrease 5% from current levels. What is the effect on the overall profit if Newman's management will drop the Restau division? (Indicate the increase or decrease, if it is a decrease, use the " sign with SPACE)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Current business divisions for Newman, holding company, are presented below.
Automotive
P 500,000 P 400,000
200,000
100,000
100 000
Restaurant
P 100,000 P1,000,000
70,000
50,000
Merchandise
Total
Sales
300,000
100 000
570,000
250.000
180,000
Variable Costs
Fixed Costs
Operating Income (loss)
100 000
(20,000)
Management is contemplating on dropping the Restaurant division since appears to be
operating at a loss. If this division is discontinued, P30,000 of its fixed costs will be
eliminated. Furthermore, Merchandise and Automotive sales will decrease 5% from their
current levels.
What is the effect on the overall profit if Newman's management will drop the Restaurant
division? (Indicate the increase or decrease, if it is a decrease, use the "-" sign with NO
SPACE)
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