The manager of Q Corporation is recommending the closure of Branch B in order to eliminate its net loss of P33,750. The income statement shows: Home Branch Branch Office A В Sales P800,000 P300,000 P500,000 P400,000 P120,000 P250,000 30,000 20,000 56,250 P720,000 P226,250 P533,750 P73,750 P(33,750) Cost of sales Operating expenses directly related to sales Operating expenses indirectly related to sales General & administrative expenses allocated Total costs & expenses Operating income 80,000 90,000 150,000 80,000 110,000 93,750 P80,000 If Branch B is closed, one personnel (with salary of P30,000) have to be transferred to the home office. Branch B has furniture costing P120,000 and with an estimated useful life of 5 years has to be transferred also to the home office. REQUIRED: 1. Do you agree with the manager? Explain.
The manager of Q Corporation is recommending the closure of Branch B in order to eliminate its net loss of P33,750. The income statement shows: Home Branch Branch Office A В Sales P800,000 P300,000 P500,000 P400,000 P120,000 P250,000 30,000 20,000 56,250 P720,000 P226,250 P533,750 P73,750 P(33,750) Cost of sales Operating expenses directly related to sales Operating expenses indirectly related to sales General & administrative expenses allocated Total costs & expenses Operating income 80,000 90,000 150,000 80,000 110,000 93,750 P80,000 If Branch B is closed, one personnel (with salary of P30,000) have to be transferred to the home office. Branch B has furniture costing P120,000 and with an estimated useful life of 5 years has to be transferred also to the home office. REQUIRED: 1. Do you agree with the manager? Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The manager of Q Corporation is recommending the closure of Branch B in
order to eliminate its net loss of P33,750. The income statement shows:
Home
Branch
Branch
Office
A
В
Sales
P800,000 P300,000 P500,000
P400,000 P120,000 P250,000
30,000
20,000
56,250
P226,250 P533,750
P73,750 P(33,750)
Cost of sales
Operating expenses directly related to sales
Operating expenses indirectly related to sales
General & administrative expenses allocated
Total costs & expenses
80,000
90,000
150,000
P720,000
P80,000
80,000
110,000
93,750
Operating income
If Branch B is closed, one personnel (with salary of P30,000) have to be
transferred to the home office. Branch B has furniture costing P120,000 and with an
estimated useful life of 5 years has to be transferred also to the home office.
REQUIRED:
1. Do you agree with the manager? Explain.
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