Cobe Company has already manufactured 28,000 units of Product A at a cost of $28 per unit. The 28,000 units can be sold at this stage for $700,000. Alternatively, the units can be further processed at a $420,000 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 $105 and for Product C is $70.
Prepare an analysis that shows whether the 28,000 units of Product A should be processed further or not.
Sell as is Process Further
sales
Relevant Cost
Total relevant cost
Income (loss)
Incremental net income or loss
The company should
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