Reference no: EM132902361

Levy Corporation had been experiencing a slowdown in business activities in August and September and is considering temporarily shut down its operations during those months. The accounting department has provided the following normal operating data for consideration:

Unit sales price P150
Unit variable production costs 60
Unit variable marketing costs 10
Monthly fixed overhead 500,000
Monthly fixed expense 200,000
Regular sales in units 10,000 per month
Estimated sales in units in August and September 5,000 per month

If the company shut down its operations, the following costs are expected to be incurred

Security and safety P200,000 per month
Re-start-up costs P100,000 per set up
Regular Fixed overhead 40% of total will remain
Regular fixed expenses will be reduced by 30%

Problem 1: The shutdown cost amount to __________

Problem 2: The shutdown point in two months is