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