Question

CI 3 Exercise 10-8 Sell or process further LO A1 Cobe Company has already manufactured 18,000 units of Product A at a cost of $25 per unit. The 18,000 units can be sold at this stage for $470,000. Alternatively, the units can be further processed at a $270,000 total additional cost and be converted into 5,800 units of Product B and 11,700 units of Product C. Per unit selling price for Product B is $105 and for Product C is $56 points 1. Prepare an analysis that shows whether the 18,000 units of Product A should be processed further or not. eBook Sell as is Process Further Sales Relevant costs: Costs to process further S 470,000S 1,264,200 Hint 270,000 Print Total relevant costs 270,000 Income (loss) References Incremental net income (or loss) if processed further The company should

Answer 1

Solution:

Cobe company
	Sell As is	Process Further
Sales	$4,70,000	$12,64,200
Relevant Costs:
Cost to process further	$0	$2,70,000
Total relevant costs	$0	$2,70,000
Income (Loss)	$4,70,000	$9,94,200
Incremental Net income (Loss) if Processed further		$5,24,200
The company should		Process Further