m. Multiple Choice Problems-Encircle the LETTER corresponding to the BEST ANSWER from the given choices. PROBLEM I (Retain or Drop a Segment) Townsend Realty, Inc. manages five (5) townhouses in Baguio City. The summary income statements of the townhouses are as follows: Rental income Expenses Profit (Loss) One P15,000 12,000 P3,000 Two P18,150 19,500 P(1,350) Three P35,205 39,000 P(3,795) Four P28,170 36,000 P(7,830) Five P15,975 19,500 P(3,525) When the company president saw the income statements, he was dismayed that only Townhouse One is earning profit. Because of this, he is considering to sell Townhouses Two to Five and continue Townhouse One only. But before making his final decision, he consulted the company's accountant first and instructed him to conduct further analysis and give a recommendation as to which townhouse/s should really be sold. The accountant's study revealed that included in the total expenses is P18,000 of corporate overhead allocated to the townhouses based on rental income. The company will continue to incur this corporate overhead regardless of whether any of the townhouses is sold. 1. Which of the townhouses should be sold? A. Four and Five B. Three and Four C. Three, Four, and Five D. Two, Three, Four, and Five 2. How much would be the increase in the total income if the appropriate townhouses were sold? A. P900.00 B. P1,485.00 C. P2,454.00 D. P4,291.80