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15 April, 22:09

Exercise 23-8 Sell or process further LO A1 Cobe Company has already manufactured 15,000 units of Product A at a cost of $30 per unit. The 15,000 units can be sold at this stage for $450,000. Alternatively, the units can be further processed at a $210,000 total additional cost and be converted into 5,800 units of Product B and 11,900 units of Product C. Per unit selling price for Product B is $107 and for Product C is $55. 1. Prepare an analysis that shows whether the 15,000 units of Product A should be processed further or not.

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  1. 16 April, 00:07
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    Yes

    Explanation:

    In this question, we have to compare the cost so that the net income or net loss would be calculated.

    Sales Process Further Cost

    Sales $450,000 $1,275,100

    Less: Processing cost $210,000

    Net income $450,000 $1,065,100

    where,

    Sales of further processing cost would be

    = 5,800 units * $107 + 11,900 units * $55

    = $620,600 + $654,500

    = $1,275,100

    Since, net income is increased by $615,100. So, It would be process further
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