10. Pili Company plans to discontinue a segment with a P32,000 segment margin.Common

Expenses allocated to the segment amounted to P45,000, of which P20,000 cannot be eliminated if the segment were closed.What would be the effect of closing down the segment of Pili Company' income? ________________________________

12. Salvar Corp. hasits own cafeteria with the following annual costs;

FoodP 100,000

Labor75,000

Overhead 110,000

TotalP 285,000

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The overhead is 40% fixed.Of the fixed overhead, P25,000 is the salary of the cafeteria supervisor.The remainder of the fixed overhead has been allocated for total company overhead.Assuming the cafeteria supervisor will remain and that Salvar will continue to pay his/her salary, what would be the maximum cost Salvar will be willing to pay an outside firm to service the cafeteria? _______________________

13. The seller of product A has no idle capacity and can sell all it can produce at P20 per unit.Outlay cost is P4.What is the opportunity cost, assuming the seller sells internally?_____________________

14. Ceret Tiles has been approached by a large chain store that offers to buy 80,000 tiles at P17.Delivery must be made within 30 days.Ceret can produce 320,000 tiles per month and has an inventory of 10,000 tiles on hand.Expected sales at regular prices for the coming month are 300,000 tiles.Ceret's sales manager believes that about 60% of sales lost during the month would be made up in later months.Price and cost data are as follows:

Selling price................................................................................P25

Variable costs:

Production....................................P12

Selling............................................315

Contribution Margin...............................................................P10

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Variable selling costs on the special order are only P2 per unit.

Compute the following:

a.The lowest price Ceret could charge on the special order and not reduce its income.________________________________

b.Suppose now that chain offers to buy 60,000 tiles per month at P17.The offer is for an entire year.Expected sales are 300,000 tiles per month without considering the special order.Also assume that there is no beginning inventory and that any sales lost during the year would not be made up in the following year.What is the lowest price that Ceret could accept?____________________________________