Holmes Company produces a product that can either be sold as is or processed fur

Question

Holmes Company produces a product that can either be sold as is or processed further. Holmes has already spent $60,000 to produce 2,050 units that can be sold now for $69,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $300 per unit. If Holmes processes further, the units can be sold for $420 each. Compute the incremental income if Holmes processes further.

9. Holmes Company produces a product that can either be sold as is or processed further. Holmes has already spent $60,000 to produce 2,050 units that can be sold now for $69,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of S300 per unit. If Holmes processes further, the units can be sold for $420 each. Compute the incremental income if Holmes processes further. Process Further Incremental Amount Sell as is Sales Additional processing costs Income (loss) The company should:

Explanation / Answer

Sell as is Process further Incremental amt Sales 69500 861000 791500 (2050*420) Additional Processing Cost 0 615000 615000 (2050*300) Income $176500 The company should process further

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