Cobe Company has already manufactured 22,000 units of Product A at a cost of $20

Question

Cobe Company has already manufactured 22,000 units of Product A at a cost of $20 per unit. The 22,000 units can be sold at this stage for $440,000. Alternatively, the units can be further processed at a $290,000 total additional cost and be converted into 5,600 units of Product B and 11,200 units of Product C. Per unit selling price for Product B is $110 and for Product C is $51. 1. Prepare an analysis that shows whether the 22,000 units of Product A should be processed further or not. Process Further Sell as is Sales Relevant costs: Total relevant costs Income (loss) Incremental net income (or loss) if processed further The company shoulo

Explanation / Answer

Sell as is Process Sales $440,000 $1,187,200 5600*110+11200*51 Relevant costs: Costs to process further $290,000 Total relevant costs $290,000 Income (loss) $440,000 $897,200 Incremental net income (or loss) if processed further $457,200 Incremental income The company should process further

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