Reference no: EM133114662

Question - A corporation has been experiencing a slowdown in business activities in August and September and is considering temporarily shutting down its operations during those months. The accounting department has provided the following normal operating data for consideration: unit sales price, P 150; unit variable production cost, P 60; unit variable marketing cost, P10; monthly fixed overhead, P 500,000, monthly fixed expenses, P200,000; regular sales in units, 10,000 per month; estimated sales in units in August and September, 5,000 per month. If the company shuts down its operations, the following costs are expected to be incurred: security and safety, P 200,000 per month; restart-up costs, P 100,000 per set-up, regular fixed overhead, 40% of total will remain; regular fixed expenses, reduced by 30%. Compute the total shutdown costs, shutdown point in two months, and the advisable alternative (continuing or discontinuing the operations) with its advantage amount.