Question

Cobe Company has already manufactured 21,000 units of Product A at a cost of $20 per unit. The 21,000 units can be sold at this stage for $410,000. Alternatively. the units can be further processed at a $290,000 total additional cost and be converted into 5,100 units of Product B and 11,000 units of Product C. Per unit selling price for Product B is $102 and for Product C is $57 1. Prepare an analysis that shows whether the 21,000 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) if processed further The company should

Answer 1

Sell as is Process Further 1147200 420000 290000 410000 420000 Sales Relavant Costs 0 420000 Total relavant cost Income (Loss) Incremented net income(or loss)ifprocessed further. 710000 437200 -10000 447200 The company should Opt for futher processing Notes Sales if process further A 5100*102 520200 $1,147,200 B -11000*57 627000