Cobe Company has already manufactured 23,000 units of Product A at a cost of S10

Question

Cobe Company has already manufactured 23,000 units of Product A at a cost of S10 per unit. The 23,000 units can be sold at this stage for $410,000. Alternatively, the units can be further processed at a $260,000 total additional cost and be converted into 5,700 units of Product B and 11,800 units of Product C. Per unit selling price for Product B is $108 and for Product C is $56. 1. Prepare an analysis that shows whether the 23,000 units of Product A should be processed further or not. Sell as is Process Further Sales Relevant costs: Total relevant costs Income (loss) Incremental net income (or loss) if processed further The company should

Explanation / Answer

Sell as is Process Further Sales $410,000 $1,276,400 Relevant costs Costs to process further 260,000 Total relevant costs 260000 Income (loss) $410,000 $1,016,400 Incremental net income (or loss) if processed further $606,400 Incremental income The company should process further

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