4.Canvass Enterprises is engaged in the bottling of a chemical compound used for car paints.Monthly production averages 200,000 bottles per month for the 3 quarters of the current year.Each bottle sells for p20 in the market.The annual fixed costs for Canvass is 7.2 millions evenly distributed on a 12-month period.

The last quarter of the year is a critical period for Canvass.It is during this last 3 months of the year where the demand for the product is expected to go down due to seasonal variation; at this period, the demand is estimated to be an average of 40,000 bottles per month.

On the belief that the company will be saved from greater losses, management is considering to shutdown operations during the last quarter of the year.A decision to shutdown would decrease the fixed costs by 30%.However, during the shutdown period, additional costs of P140,000 is needed for security and insurance.To restart operations, the company will spend P50,000.The following data are gathered from the records of Canvass Enterprises;

Production cost per bottle:

Direct materials..................................P7

Direct labor....................................... 4

Variable factory overhead....................... 3

Total................................................14

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Variable selling and administrative expense per bottleP2

Compute the following;

1.Shutdown point in units? ____________

2.Shutdown cost? ____________________

3.What is the effect on net income if the company will shutdown?____________

5. Geary Manufacturing has assembled the following data pertaining to two popular products.

BlenderElectric Motor

Direct Materials................................. P6P11

Direct Labor......................................49

Factory overhead @ P16 per hour1632

Costs if purchased from an outside supplier2038

Annual demand (Units).......................20,00028,000

Past experience has shwon that the fixed manufacturing overhead component included in the cost per machine hour averages P10.Geary has a policy of filling all sales orders, even if it means purchasing units from outside suppliers.

If 50,000 machine are available, and Geary Manufacturing desires to follow an optimal strategy.How many units of Blender and/or Electric motor should the company produced? Blender? _________________Electric Motor? ___________________

6Condensed monthly operating income data for Cosmo Inc. for November 2007 is presented below.Additional information regarding Cosmo's operation follows the statement.

TOTALHALL STORETOWN STORE

SalesP200,000P80,000P120,000

Less; Variable costs116,000 32,000 84,000

Contribution MarginP84,000P48,000P36,000

Less: Direct Fixed Expenses 60,00020,000 40,000

Store segment marginP24,000P28,000P (4,000)

Less: Common fixed costs10,0004,0006,000

Operating IncomeP14,000P24,000P(10,000)

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One-fourth of each store's direct fixed expenses would continue through December 31, 2008, if either store were closed.

Management estimates that closing the Town Store would result in a ten percent decrease in Hall Store.Hall Store would not affect Town Store sales.

The operating results for November 2007 are representative of all months.

A decision by Cosmo, Inc. to close the Town Store would result in a monthly increase or decrease in Cosmo's operating income during 2008 of what amount?______________