Product T is produced for $5.70 per pound. Product T can be sold without additio
ID: 2489658 • Letter: P
Question
Product T is produced for $5.70 per pound. Product T can be sold without additional processing for $7.99 per pound, or processed further into Product U at an additional cost of $0.71 per pound. Product U can be sold for $8.85 per pound.
Amount Descriptions
Differential Analysis
1. Prepare a differential analysis dated August 2 on whether to sell Product T (Alternative 1) or process further into Product U (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.
Differential Analysis
Sell Product T (Alternative 1) or Process Further into Product U (Alternative 2)
August 2
1
Sell Product T
Process Further into Product U
Differential Effect on Income
2
(Alternative 1)
(Alternative 2)
(Alternative 2)
3
4
5
Required: 1. Prepare a differential analysis dated August 2 on whether to sell Product T (Alternative 1) or process further into Product U (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 T be sold (Alternative 1) or processed further into Product U (Alternative 2)?Explanation / Answer
SOLUTION (AMOUNT IN $) SALE WITHOUT FURTHER PROCESSING SALE WITH FURTHER PROCESSING DIFFERENCE SALE PRICE 7.99 8.85 0.86 LESS: PRODUCTION COST 5.7 5.7 0 LESS: ADDITIONAL COST 0.71 0.71 PROFIT 2.29 2.44 0.15
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