Sell or Process Further
Jensen Manufacturing Company makes a partially completed assembly unit that it sells for $36 per unit. Normally, 42,000 units are sold each year. Variable unit cost data on the assembly are as follows:
Direct material | $10 |
Direct labor | 8 |
Variable manufacturing overhead | 4 |
The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for $41 per unit. If the company does this, material and labor costs will each increase by $2 per unit and variable overhead will go up by $1 per unit. Fixed costs will increase from the current level of $160,000 to $180,000.
Prepare an analysis showing whether Jensen should process the assemblies further.
Use a negative sign with answer to only indicate a loss from processing assemblies further; otherwise do not use negative signs with your answers.
Sell of Process Further Differential Analysis | |
---|---|
Differential revenue | |
Differential costs | |
Direct material | |
Direct labor | |
Variable overhead | |
Fixed costs | |
Additional income (loss) from processing further |
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Jensen Manufacturing Company makes a partially completed assembly unit that it sells for $36 per unit. Normally, 42,000 units are sold each year. Variable unit cost data on the assembly are as follows:
Jensen Manufacturing Company makes a partially completed assembly unit that it sells for $45 per unit. Normally, 37,000 units are sold each year. Variable unit cost data on the assembly are as follows: Direct material $10 Direct labor 8 Variable manufacturing overhead 4 The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for $52 per unit. If the company does this, material and...
Sell or Process Further Jensen Manufacturing Company makes a partially completed assembly unit that it sells for $43 per unit. Normally, 39,000 units are sold each year. Variable unit cost data on the assembly are as follows: Direct material $10 Direct labor 8 Variable manufacturing overhead 4 The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for $50 per unit. If the company...
Please show the process you used to get the answer so I can understand. 12:29 & AMP 62 0 .65% Business Course My Subscriptions Prepare an analysis showing whether Jensen should process the assemblies further. Use a negative sign with answer to only indicate a loss from processing assemblies further; otherwise do not use negative signs with your answers. Sell of Process Further Differential Analysis Differential revenue 3,088,558 x Differential costs Direct material 788,568 x Direct labor 657,140 x Variable...
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Special Order Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per period of 8,000 units of product that sell for $60 each. For the foreseeable future, regular sales volume should continue to equal normal capacity. Direct material $100,800 Direct labor 62,400 Variable manufacturing overhead 46,800 Fixed manufacturing overhead (Note 1) 38,400 Selling expense (Note 2) 35,200 Administrative expense (fixed) 15,000 $298,600 Notes: 1. Beyond normal capacity, fixed overhead costs increase $1,800 for each 500 units...