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NUBD Co. has been incurring losses in the past years during the third quarter of the year. Management is considering to shutdown operations during this period to avoid continued losses. Allocated fixed operational monthly costs were determined from the records amount t P60,000. Average monthly sales during the year except the third quarter are 10,000 units. The company averages only 2,500 units monthly during the third quarter. Units are sold at a price of P30 each. Variable costs to produce and sell the units are P18 per unit. If management decides to shutdown operations they would save on allocated fixed costs 40%, but will incur additional shutdown costs of P4,000 per month. What would be the advantage of continued operations? *

NUBD Co. has been incurring losses in the past years during the third quarter of the year. Management is considering to shutdown operations during this period to avoid continued losses. Allocated fixed operational monthly costs were determined from the records amount t P60,000. Average monthly sales during the year except the third quarter are 10,000 units. The company averages only 2,500 units monthly during the third quarter. Units are sold at a price of P30 each. Variable costs to produce and sell the units are P18 per unit. If management decides to shutdown operations they would save on allocated fixed costs 40%, but will incur additional shutdown costs of P4,000 per month. What would be the advantage of continued operations? *

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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NUBD Co. has been incurring losses in the past years during the third quarter of the year. Management is considering to shutdown operations during this period to avoid continued losses. Allocated fixed operational monthly costs were determined from the records amount to P60,000. Average monthly sales during the year except the third quarter are 10,000 units. The company averages only 2,500 units monthly during the third quarter. Units are sold at a price of P30 each. Variable costs to produce and sell the units are P18 per unit. If management decides to shutdown operations they would save on allocated fixed costs 40%, but will incur additional shutdown costs of P4,000 per month. What would be the advantage of continued operations? Sample format: 11,111
Transcribed Image Text:NUBD Co. has been incurring losses in the past years during the third quarter of the year. Management is considering to shutdown operations during this period to avoid continued losses. Allocated fixed operational monthly costs were determined from the records amount to P60,000. Average monthly sales during the year except the third quarter are 10,000 units. The company averages only 2,500 units monthly during the third quarter. Units are sold at a price of P30 each. Variable costs to produce and sell the units are P18 per unit. If management decides to shutdown operations they would save on allocated fixed costs 40%, but will incur additional shutdown costs of P4,000 per month. What would be the advantage of continued operations? Sample format: 11,111
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