ANSWER EXACTLY AS SHOWN ABOVE IN THE CHART. Holmes Company produces a product th

Question

ANSWER EXACTLY AS SHOWN ABOVE IN THE CHART.

Holmes Company produces a product that can be either sold as is or processed further. Holmes has already spent $86,000 to produce 1,950 units that can be sold now for $97,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $255 per unit. If Holmes processes further, the units can be sold for $385 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

Compute incremental income :

Sell as is Process further Incremental amount Sales 97500 750750 653250 Additional Processing costs (497250) (497250) Income (loss) 97500 253500 156000 The company should : Process further

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