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Using also the high low point method the estimated

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32.Using also the high-low point method, the estimated annual fixed cost for maintenance expenseis:a. P48,000c. P128,000b. P96,000d. P144,000
ITEMS 33 to 37 ARE BASED ON THE FOLLOWING INFORMATION:The management of Riviera Corporation is evaluating the profitability of the company’s presentproduct mix.Several proposals are being reviewed.A partial income statement and otherinformation follows:ProductsABCDEFGHIJKLTOTALSalesP24,000P35,000P24,000P30,000P113,000Cost of Sales10,00020,00025,00025,00080,000Gross profitP14,000P15,000(P 1,000)P5,000POperating costs5,0008,1258,0006,00027,125Income before taxP9,000P6,875(P9,000)(P1,000)(P5,875)Units sold2,0002,5003,0004,000Selling price/unitP12.00P14.00P8.00P7.50Variable cost ofsales/unitP3.00P5.00P6.50P5.00Variable operatingcost/unitP1.50P1.25P2.00P1.00The various proposals shall be treated as separate and independent of the otherproposals.Consider only the product changes stated in each proposal, the activity of otherproducts remain the same.Disregard effects of income taxes.Based on the aboveinformation:33.If the production of GHI is stopped, the effect on income will be33,000
CPA REVIEW SCHOOL OF THE PHILIPPINESMANAGEMENT ADVISORY SERVICESMASW 8901Page 15 of 2334.If the production of GHI is stopped and an accompanying loss of the customers results in adecrease of 500 units in sales of product DEF, the total effect on income will be
35.If the selling price of GHI is increased by P1.25 per unit with a reduction in the number of unitssold to 2,000, the effect on income will be
36.The factory in which GHI is produced can be used to manufacture another product, MNO.Thetotal variable cost and expenses per unit of this new product is P9.50 and 2,500 units can besold at P10.75 each.If MNO is introduced and GHI is discontinued, the total effect on incomewill bea. P4,625 increasec. P4,625 decreaseb. P3,125 increased. P3,125 decrease

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Term
Spring
Professor
Cris Casiple
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