Homework Answers
OPTION: Product B
PRODUCT A:
benefit(loss) = additional sales - additional costs
= ($24000 - $14000) - $9000
= $1000
PRODUCT B:
benefit(loss) = additional sales - additional costs
= ($21000 - $16000) - $6000
= ($1000)
PRODUCT C:
benefit(loss) = additional sales - additional costs
= ($19000 - $13000) - $4000
= $2000
CONCLUSION:
As in case of product B, there is loss of $1000 by processing it further, therefore this product should not be processed further.
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Sales Value after
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the split-off point or processed further and then sold. The
following results are from a recent period:
Product
Sales Value
at Split-off
Additional
Variable Costs
Sales Value after
Further Processing
Green lumber
$159600
$24000
$178000
Rough lumber
114000
26100
159600
Sawdust
94000
17900
120000
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$90000
$235600
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