"It's close to a P30,000 loser and we ought to devote our efforts elsewhere," noted Laura Rigby, after reviewing financial reports of her company's attempt to offer a reduced-price daycare service to employees. The daycare's financial figures for the year just ended follow.

Revenues	P85,000
Variable costs	30,000
Traceable fixed costs	68,000
Allocated corporate overhead	15,000

If the daycare service/center is closed, 70% of the traceable fixed cost will be avoided. In addition, the company will incur one-time closure costs of P5,900.

Required:

1. Show calculations that support Laura Rigby's belief that the daycare center lost almost P30,000.
2. Should the center be closed? Show calculations to support your answer.
3. What problem might the company experience if the center is closed?

Riverside Company manufactures G and H in a joint process. The joint costs amount to P80,000 per batch of finished goods. Each batch yields 20,000 liters, of which 40% are G and 60% are H. The selling price of G is P8.75 per liter, and the selling price of H is P15.00 per liter.

Required:

1. If the joint costs are allocated on the basis of the products' sales value at the split-off point, what amount of joint cost will be charged to each product?
2. Riverside has discovered a new process by which G can be refined into Product GG, which has a sales price of P12 per liter. This additional processing would increase costs by P2.10 per liter. Assuming there are no other changes in costs, should the company use the new process? Show calculations.