What would be the advantage of continued operations

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Problem 1: MALAMIG company has been incurring losses in the past years during the third quarter of 2020. Management is considering shutting down operations during this period to avoid continued losses. Allocated fixed operational monthly costs were determined from the records amount to P60,000. Average monthly sales during the year except the 3rd quarter are 10,000 units. The company averages only 2,500 units monthly during the 3rd quarter. Selling price is P 30/unit. VC/unit is P 18. If management decides to shut down operations they would save on allocated fixed costs at 40%, but will incur additional shutdown costs of P4,000/month. What would be the advantage of continued operations?

a) P120,000

b) 90,000

c) 60,000

d) 30,000

Reference no: EM132764474

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