Question

Exercise 23-8 Sell or process further LO A1 Cobe Company has already manufactured 16,000 units of Product A at a cost of $20 per unit. The 16,000 units can be sold at this stage for $470.000. Alternatively, the units can be further processed at a $290,000 total additional cost and be converted into 5100 units of Product B and 12,000 units of Product C. Per unit selling price for Product B is $108 and for Product is $60. 1. Prepare an analysis that shows whether the 16,000 units of Product A should be processed further or not. Sell as is Process Further Sales Relevant costs Total relevant costs Income loss) Incremental net income (or loss further processed The company should

Answer 1

Answer:- process sell as is Purthur $ 6,270,800 $ 470,000 sales Relavent costs? $299000 Cost to process furthur $299,000 Total relavent costs $980,800 Income/loss $470,000 $ 510,800 Incuemental Income Incremental het income loss of procey furthur The company furthur should = process = 108 * (5100 x $ $8)+(12000x $60) = $ 1,270,800