Zambales Mining Co. mines three products. Gold Ore sells for P1,000,000 per ton, variable costs are P600,000 per ton, and fixed mining costs are P5,000,000. The segment margin for 2005 was P(1,000,000). The management of Zambales Mining was considering dropping the mining of Gold Ore. Only one-half of the fixed expenses are direct and would be eliminated if the segment was dropped. If Gold Ore were dropped, net income for Zambales Mining would increase (decrease) by how much? (Note: Precede your answer with
Zambales Mining Co. mines three products. Gold Ore sells for P1,000,000 per ton, variable costs are P600,000 per ton, and fixed mining costs are P5,000,000. The segment margin for 2005 was P(1,000,000). The management of Zambales Mining was considering dropping the mining of Gold Ore. Only one-half of the fixed expenses are direct and would be eliminated if the segment was dropped. If Gold Ore were dropped, net income for Zambales Mining would increase (decrease) by how much? (Note: Precede your answer with
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Zambales Mining Co. mines three products. Gold Ore sells for P1,000,000 per ton, variable costs are P600,000 per ton, and fixed mining costs are P5,000,000. The segment margin for 2005 was P(1,000,000). The management of Zambales Mining was considering dropping the mining of Gold Ore. Only one-half of the fixed expenses are direct and would be eliminated if the segment was dropped. If Gold Ore were dropped, net income for Zambales Mining would increase (decrease) by how much? (Note: Precede your answer with negative sign to indicate decrease.)
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