10 ! Help Seve &Exit; Submit Check my work Exercise 10-8 Sell or process further

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10 ! Help Seve &Exit; Submit Check my work Exercise 10-8 Sell or process further LO A1 Cobe Company has already manufactured 18,000 units of Product A at a cost of $20 per unit. The 19,000 units can be sold at this stage for $450000. Alternatively, the units can bé further processed at a $280,000 total additional cost and be converted into 5,200 units of Product B and 11,900 units of Product C. Per unit selling price for Product B is $110 and for Product C s $60 pcints 1. Prepare an analysis that shows whether the 18.000 units of Product A should be processed further or not. Sell as is Process Further Sales Relevant costs Total relevant costa incoma (loss) turther O Type here

Explanation / Answer

ans) Analysis that shows whether the 18000 units of Product A should be processed further or not

Sell as is Process Further

Sales 450,000 1286000   

(5200 X 110 + 11900 X 60)

Relevant costs:

Costs to process further 280,000 Total relevant costs 280,000

Income (loss) 450,000 1006000

Incremental net income (or loss) if processed further 556000 (1006000 -450,000) incremental income

The company should process further

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