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Compute for the effect on the firm operating income

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Reference no: EM132791333

Problem 1. A firm produces 20,000 units of its product for each month. The product sells for P15 and has contribution margin of P4. Its fixed costs is P56,000. Compute for the effect on the firm's operating income if the firm stops selling it.

Problem 2. A firm wants to upgrade its obsolete product of 400 units costing P26,800. Additional cost to upgrade totals P10,000 and could be sold for a total of P30,000. If not, the obsolete units could be sold for P11,200. Compute for the effect on the firm from upgrading and selling the product.

Reference no: EM132791333

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