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Z Company plans to discontinue a department with the following average monthly operating results: Sales 120,000.00 Variable costs 70,000.00 Contribution Margin 50,000.00 Fixed Costs 80,000.00 Operating loss 30.000.00 P P P

Z Company plans to discontinue a department with the following average monthly operating results: Sales 120,000.00 Variable costs 70,000.00 Contribution Margin 50,000.00 Fixed Costs 80,000.00 Operating loss 30.000.00 P P P

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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Z Company plans to discontinue a department with the following average monthly operating results: Sales 120,000.00 Variable costs 70,000.00 Contribution Margin 50,000.00 Fixed Costs 80,000.00 Operating loss P P 30,000.00 If the department is discontinued, P35,000.00 of the fixed costs could be eliminated. O Decrease of P15,000.00 O Increase of P15,000.00 Increase of P5,000.00 Decrease of P5,000.00 Question: What would be the effect of the discontinuance of the department on Z Company's profit before tax?
Transcribed Image Text:Z Company plans to discontinue a department with the following average monthly operating results: Sales 120,000.00 Variable costs 70,000.00 Contribution Margin 50,000.00 Fixed Costs 80,000.00 Operating loss P P 30,000.00 If the department is discontinued, P35,000.00 of the fixed costs could be eliminated. O Decrease of P15,000.00 O Increase of P15,000.00 Increase of P5,000.00 Decrease of P5,000.00 Question: What would be the effect of the discontinuance of the department on Z Company's profit before tax?
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