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PROBLEM 1 Condensed monthly operating income data for CO-BED Inc. for May follow: UNAN Store CO-MOT Store Total Sales P80,000 P120,000 P200,000 Variable costs 32,000 84,000 116,000 Contribution margin P48,000 P 36,000 P 84,000 Direct fixed costs 20,000 40,000 60,000 Store segment margin P28,000 P (4,000) P 24,000 Common fixed cost 4,000 6,000 10,000 Operating income P24,000 P(10,000) P 14,000 Additional information regarding CO-BED's operations follows: One-fourth of each store's direct fixed costs would continue if either store is closed. CO-BED allocates common dixed costs to each store on the basis of sales Pesos. Management estimates that closing CO-MOT Store would result in a 10% decrease in UNAN Store's sales. Whereas closing UNAN Store would not affect CO-MOT Store's sales. ⚫ The operating results for May are representative of all months. From the above information, answer the following questions: 1. A decision by CO-BED to close CO-MOT Store would result in a monthly increase (decrease) in CO-BED's operating income by how much? 2. CO-BED is considering a promotional campaign at CO-MOT Store that would not affect UNAN Store. Increasing annual promotional expense at CO- MOT Store by P60,000 in order to increase this store's sales by 10% would result in a monthly increase (decrease) in CO-BED's operating income during the year by how much? (round off to whole number) 3. One-half of CO-MOT Store's Peso sales are from items sold at variable cost to attract customers to the store. CO-BED is considering the deletion of these items, a move that would reduce CO-MOT Store's direct fixed expenses by 15% and result in a 20% loss of CO-MOT Store's remaining sales volume. This change would not affect UNAN Store. A decision by CO-BED to eliminate the items sold at cost would result in a monthly increase (decrease) in CO-BED's operating income by what amount?

PROBLEM 1 Condensed monthly operating income data for CO-BED Inc. for May follow: UNAN Store CO-MOT Store Total Sales P80,000 P120,000 P200,000 Variable costs 32,000 84,000 116,000 Contribution margin P48,000 P 36,000 P 84,000 Direct fixed costs 20,000 40,000 60,000 Store segment margin P28,000 P (4,000) P 24,000 Common fixed cost 4,000 6,000 10,000 Operating income P24,000 P(10,000) P 14,000 Additional information regarding CO-BED's operations follows: One-fourth of each store's direct fixed costs would continue if either store is closed. CO-BED allocates common dixed costs to each store on the basis of sales Pesos. Management estimates that closing CO-MOT Store would result in a 10% decrease in UNAN Store's sales. Whereas closing UNAN Store would not affect CO-MOT Store's sales. ⚫ The operating results for May are representative of all months. From the above information, answer the following questions: 1. A decision by CO-BED to close CO-MOT Store would result in a monthly increase (decrease) in CO-BED's operating income by how much? 2. CO-BED is considering a promotional campaign at CO-MOT Store that would not affect UNAN Store. Increasing annual promotional expense at CO- MOT Store by P60,000 in order to increase this store's sales by 10% would result in a monthly increase (decrease) in CO-BED's operating income during the year by how much? (round off to whole number) 3. One-half of CO-MOT Store's Peso sales are from items sold at variable cost to attract customers to the store. CO-BED is considering the deletion of these items, a move that would reduce CO-MOT Store's direct fixed expenses by 15% and result in a 20% loss of CO-MOT Store's remaining sales volume. This change would not affect UNAN Store. A decision by CO-BED to eliminate the items sold at cost would result in a monthly increase (decrease) in CO-BED's operating income by what amount?

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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PROBLEM 1 Condensed monthly operating income data for CO-BED Inc. for May follow: UNAN Store CO-MOT Store Total Sales P80,000 P120,000 P200,000 Variable costs 32,000 84,000 116,000 Contribution margin P48,000 P 36,000 P 84,000 Direct fixed costs 20,000 40,000 60,000 Store segment margin P28,000 P (4,000) P 24,000 Common fixed cost 4,000 6,000 10,000 Operating income P24,000 P(10,000) P 14,000 Additional information regarding CO-BED's operations follows: One-fourth of each store's direct fixed costs would continue if either store is closed. CO-BED allocates common dixed costs to each store on the basis of sales Pesos. Management estimates that closing CO-MOT Store would result in a 10% decrease in UNAN Store's sales. Whereas closing UNAN Store would not affect CO-MOT Store's sales. ⚫ The operating results for May are representative of all months. From the above information, answer the following questions: 1. A decision by CO-BED to close CO-MOT Store would result in a monthly increase (decrease) in CO-BED's operating income by how much? 2. CO-BED is considering a promotional campaign at CO-MOT Store that would not affect UNAN Store. Increasing annual promotional expense at CO- MOT Store by P60,000 in order to increase this store's sales by 10% would result in a monthly increase (decrease) in CO-BED's operating income during the year by how much? (round off to whole number) 3. One-half of CO-MOT Store's Peso sales are from items sold at variable cost to attract customers to the store. CO-BED is considering the deletion of these items, a move that would reduce CO-MOT Store's direct fixed expenses by 15% and result in a 20% loss of CO-MOT Store's remaining sales volume. This change would not affect UNAN Store. A decision by CO-BED to eliminate the items sold at cost would result in a monthly increase (decrease) in CO-BED's operating income by what amount?
Transcribed Image Text:PROBLEM 1 Condensed monthly operating income data for CO-BED Inc. for May follow: UNAN Store CO-MOT Store Total Sales P80,000 P120,000 P200,000 Variable costs 32,000 84,000 116,000 Contribution margin P48,000 P 36,000 P 84,000 Direct fixed costs 20,000 40,000 60,000 Store segment margin P28,000 P (4,000) P 24,000 Common fixed cost 4,000 6,000 10,000 Operating income P24,000 P(10,000) P 14,000 Additional information regarding CO-BED's operations follows: One-fourth of each store's direct fixed costs would continue if either store is closed. CO-BED allocates common dixed costs to each store on the basis of sales Pesos. Management estimates that closing CO-MOT Store would result in a 10% decrease in UNAN Store's sales. Whereas closing UNAN Store would not affect CO-MOT Store's sales. ⚫ The operating results for May are representative of all months. From the above information, answer the following questions: 1. A decision by CO-BED to close CO-MOT Store would result in a monthly increase (decrease) in CO-BED's operating income by how much? 2. CO-BED is considering a promotional campaign at CO-MOT Store that would not affect UNAN Store. Increasing annual promotional expense at CO- MOT Store by P60,000 in order to increase this store's sales by 10% would result in a monthly increase (decrease) in CO-BED's operating income during the year by how much? (round off to whole number) 3. One-half of CO-MOT Store's Peso sales are from items sold at variable cost to attract customers to the store. CO-BED is considering the deletion of these items, a move that would reduce CO-MOT Store's direct fixed expenses by 15% and result in a 20% loss of CO-MOT Store's remaining sales volume. This change would not affect UNAN Store. A decision by CO-BED to eliminate the items sold at cost would result in a monthly increase (decrease) in CO-BED's operating income by what amount?
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