Product K is produced for $5.46 per pound. Product K can be sold without additio

Question

Product K is produced for $5.46 per pound. Product K can be sold without additional processing for $7.89 per pound or processed further into Product L at an additional cost of $0.80 per pound. Product L can be sold for $8.83 per pound. Required: 1. Prepare a differential analysis dated November 15 on whether to sell Product K (Alternative 1) or process further into Product L (Alternative 2). Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter “0”. A colon (:) will automatically appear if required. 2. Should Product K be sold (Alternative 1) or processed further into Product L (Alternative 2)?

Explanation / Answer

Required: 1. Prepare a differential analysis dated November 15 on whether to sell Product K (Alternative 1) or process further into Product L (Alternative 2).

2) Proudct should be process further and sell product L (alternative 2)

Product K (alternative 1) Product L (alternative 2) Revenue per unit 7.89 8.83 Costs Cost to manufacture -5.46 -5.46 Additional cost 0 -0.80 Income (loss) per unit 2.43 2.57

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