23 Homework xC05 25 12 Decision ToAc ? Oezto.mheducation.com/hm.tpx Exercise 23-

Question

23 Homework xC05 25 12 Decision ToAc ? Oezto.mheducation.com/hm.tpx Exercise 23-7 Sell or process further LO A1 Varto Company has 9.200 units of its sole product in inventory that it produced last year at a cost of $30 each. This year's model is superior to last year's and the 9 200 units cannot be sold at last year's regular selling price of $45 each Varto has two alternatives for these items (1) they can be sold to a wholesaler for $8 each, or (2) they can be processed further at a cost of $246,300 and then sold for $34 each Prepare an analysis to determine whether Varto should sell the products as is or process them further and then sell them ENTA?REVENUE ANDCOSTOF ADDITIONAL ESSING Revenue if processed further Revenue if sold as is Incremental revenue Incremental net income Loss) The company should Hints Reterences eBook & Resources O Type here to searcih

Explanation / Answer

Statement of Analysis of Revnue and cost of Production

By selling to the wholesaler without further processing will help to reduce the loss upto $7,100.

So Varto should sell to the wholesaler.

If you have any doubt or clarification needed please let me know.

Thank you!

Particulars Working Revenue if Processed Further $                                          312,800.00 9200 x 34 Less: Cost of goos sold $                                          276,000.00 9200 x 30 Less: Additional Cost $                                          246,300.00 (given) Net Loss $                                        (209,500.00) Revenue If Sold to Wholesaler $                                            73,600.00 9200 x 8 Less: Cost of goos sold $                                          276,000.00 9200 x 30 Net Loss $                                        (202,400.00) Decrease in loss $                                               7,100.00

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