Z Company sells three (3) products, A, B, and C. The company is considering to discontinue the production and sales of product C. Sales and cost date of the three (3) products are as follows: B с Sales price per unit P7.00 P9.00 VC per unit 3.00 7.00 CM per unit P4.00 P2.00 Total FC per unit 2.00 P21.00 P5.00 12.00 A P 9.00 3.00 Profit/Loss per unit P2.00 (P1.00) P 3.00 P3.00 2.00 1.00 6.00 P2.00 Fixed costs are allocated among the three (3) products based on the floor area they occupy. Question: Which among the three (3) products should the company eliminate?
Z Company sells three (3) products, A, B, and C. The company is considering to discontinue the production and sales of product C. Sales and cost date of the three (3) products are as follows: B с Sales price per unit P7.00 P9.00 VC per unit 3.00 7.00 CM per unit P4.00 P2.00 Total FC per unit 2.00 P21.00 P5.00 12.00 A P 9.00 3.00 Profit/Loss per unit P2.00 (P1.00) P 3.00 P3.00 2.00 1.00 6.00 P2.00 Fixed costs are allocated among the three (3) products based on the floor area they occupy. Question: Which among the three (3) products should the company eliminate?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
What are the correct answers to questions 1 and 2?
Transcribed Image Text:Suppose in the preceding problem
above, Z Company decided to eliminate
Product C, what will be the effect on the
company's total income?
Increase in profit by P1.00 per unit
Decrease in profit by P2.00 per unit
Increase in profit by P3.00 per unit
O Decrease in profit by P3.00 per unit
Transcribed Image Text:Z Company sells three (3) products, A, B,
and C. The company is considering to
discontinue the production and sales of
product C.
Sales and cost date of the three (3)
products are as follows:
B
с
Sales price per unit
P7.00
P9.00
VC per unit
3.00
7.00
CM per unit
P4.00
P2.00
FC per unit
2.00
Total
O Product A
Product B
Product C
P21.00
12.00
Either A, B, or C
3.00
Profit/Loss per unit
P2.00 (P1.00) P 3.00
6.00
P5.00
P 9.00
A
P3.00
2.00
1.00
Fixed costs are allocated among the
three (3) products based on the floor
area they occupy.
P2.00
Question: Which among the three (3)
products should the company
eliminate?
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