SANTOS Company has two prominent stores in Visayas one in Leyte and another in Samar. The...

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SANTOS Company has two prominent stores in Visayas one in Leyte and another in Samar. The operating results for November 2019, which are representatives of all months, are condensed as follows: Sales Variable costs Contribution margin Direct fixed costs Store margin Indirect fixed costs, allocated based on Peso sales Operating income Leyte Store P400,000 160,000 240,000 100,000 140,000 20,000 P120,000 Product W X Y Z Samar Store P600,000 420,000 180,000 200,000 (20,000) Sales Value at split-off point P 40,000 12,000 20,000 28,000 Additional processing costs P 60,000 4,000 32,000 20,000 4. Which products should Manning process further ? 30,000 (P 50,000) Additional information : a. Thirty percent (30%) of each store's fixed costs cannot be eliminated even if either store is closed. b. If the Samar store is closed, the Leyte store's sales would decrease by 20 %. However, closing the Leyte store would not affect the Samar store's sales. 1. If the objective is to maximize total company profit, which store should be closed ? 2. If the Samar store is closed, the company's total income would increase (decrease ) by Total P1,000,000 3. In order to improve the profitability of the Samar store, the company is considering promotional campaign that would not affect the Leyte store. The campaign would cost P300,000 annually, and it is expected to increase the Leyte store's sales by 20%. The promotional campaign would result in a monthly increase (decrease ) in the SANTOS company's operating income of 580,000 420,000 300,000 120,000 B. (5 pts) Manning Company uses a joint process to produce products W,X,Y and Z. Each product may be sold at its split -off point or processed further. Additional processing costs of specific products are entirely variable. Joint processing costs for a single batch of joint products are P120,000. Other relevant data are as follows: 50,000 P 70,000 Sales value of final product P 80,000 20,000 120,000 32,000 SANTOS Company has two prominent stores in Visayas one in Leyte and another in Samar. The operating results for November 2019, which are representatives of all months, are condensed as follows: Sales Variable costs Contribution margin Direct fixed costs Store margin Indirect fixed costs, allocated based on Peso sales Operating income Leyte Store P400,000 160,000 240,000 100,000 140,000 20,000 P120,000 Product W X Y Z Samar Store P600,000 420,000 180,000 200,000 (20,000) Sales Value at split-off point P 40,000 12,000 20,000 28,000 Additional processing costs P 60,000 4,000 32,000 20,000 4. Which products should Manning process further ? 30,000 (P 50,000) Additional information : a. Thirty percent (30%) of each store's fixed costs cannot be eliminated even if either store is closed. b. If the Samar store is closed, the Leyte store's sales would decrease by 20 %. However, closing the Leyte store would not affect the Samar store's sales. 1. If the objective is to maximize total company profit, which store should be closed ? 2. If the Samar store is closed, the company's total income would increase (decrease ) by Total P1,000,000 3. In order to improve the profitability of the Samar store, the company is considering promotional campaign that would not affect the Leyte store. The campaign would cost P300,000 annually, and it is expected to increase the Leyte store's sales by 20%. The promotional campaign would result in a monthly increase (decrease ) in the SANTOS company's operating income of 580,000 420,000 300,000 120,000 B. (5 pts) Manning Company uses a joint process to produce products W,X,Y and Z. Each product may be sold at its split -off point or processed further. Additional processing costs of specific products are entirely variable. Joint processing costs for a single batch of joint products are P120,000. Other relevant data are as follows: 50,000 P 70,000 Sales value of final product P 80,000 20,000 120,000 32,000