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19 April, 11:03

Sell or Process Further

Great Lakes Boat Company manufactures sailboat hulls at a cost of $4,200 per unit. The hulls are sold to boat yards for $5,200. The company is evaluating the desirability of adding masts, sails, and rigging to the hulls prior to sale at an additional cost of $1,900. The completed sailboats could then be sold for $6,500 each.

Calculate the net benefit (cost) of processing the boat hulls into sail boats. Assume sales volume will not be affected. Use a negative sign with your answer, if appropriate.

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  1. 19 April, 14:49
    0
    -$600

    Explanation:

    For computing the net benefit or (cost), first, we have to determine the sales price increased which is shown below"

    = Sale value of completed sailboats - a sale to boatyards

    = $6,500 - $5,200

    = $1,300

    And, the additional cost is $1,900

    So, the net processing cost would be

    = $1,300 - $1,900

    = - $600

    All other information which is given is not relevant. Hence, ignored it
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