Question

Process or Sell Product 319 Is produced for $3.42 per gallon. Product 319 can be sold without additional processing for $4.24 per gallon, or processed further into Product R33 at an additional cost of $0.35 per gallon. Product R33 can be sold for $4.32 per gallon a. Prepare a differential analysis dated April 30 on whether to sell Product 319 (Alternative 1) or process further into Product R33 (Alternative 2). If required, round your answers to the nearest whole dollar. Differential Analysis Sell Product 319 (Alt. 1) or Process Further Into Product R33 (Alt. 2) April 30 Sell Product ]19 (Alternative 1) Process Further into Product R33 (Alternative 2) Drferential efect on Income (Alternative 2) Revenues, per unit Costs, per unit Income (loss), per unit b. Should Product 319 be sold (Alternative 1) or processed further into Product R33 (Alternative 2)

Answer 1

ANSWER:-

(a)

	Differential analysis
	Sell product J19	Process further into product R33	Differential effect on income
	Alternative:1	Alternative:2
Revenues per unit	$4.24	$4.32	$0.08
Costs per unit	$3.42	$4.24	$0.82
		($3.42+$0.82)
Income (loss) per unit	$0.35	$0.08	$-0.27

It is advisable not to process further since it will result in decrease in income by $0.27 per unit.

(b)
Alternative 1 in better that is J19 is better to be sold ($0.27) income will get on J19 product.

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