A company has already incurred a $15,000 cost in partially producing its three p

Question

A company has already incurred a $15,000 cost in partially producing its three products. Their selling prices when partially and fully processed are shown in the table below with the additional costs necessary to finish their processing. Based on this information, should any products be processed further?
Product. Unfinished Selling Price. Finished Selling Price. Further Processing Costs.
A $750 $875 $130
B $850 $1,000 $155
C $950 $1200 $255
All of these products should be processed further.
None of these products should be processed further.
Only product A should be processed further.
Only product B should be processed further.
Only product C should be processed further.

Explanation / Answer

Answer: None of these products should be processed further. Because: If A is processed further, they will lose $5. 875-750 = 125 125-130 = -5 If B is processed further, they will lose $5. 1,000 - 850 = 150. 150 - 155 = -5 If C is processed further, they will lose $5. 1200 - 950 = 250. 250 - 255 = -5

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