Question

Oficina Bonita Company manufactures office furniture. An unfinished desk is produced for $37.55 and sold for $65.60. A finished desk can be sold for $74.50. The additional processing cost to complete the finished desk is $6.15. Prepare a differential analysis. Round your answers to two decimal places. Differential Analysis Sell Unfinished (Alternative 1) or Process Further into Finished (Alternative 2) Desks Sell Unfinished Desks (Alternative 1) Process Further into Finished Desks (Alternative 2) Differential Effects (Alternative 2) Revenues per desk $ $ $ Costs per desk Profit (loss) per desk $ $ $ Should the company sell unfinished desks or process further and sell finished desks? Oficina Bonita Company should .

Answer 1

Solution:

Differential Analysis
Sell Unfinished (Alternative 1) or Process Further into Finished (Alternative 2)
Particulars	Sell Unfinished Desks (Alternative 1)	Process Further into Finished Desks (Alternative 2)	Differential Effects (Alternative 2)
Revenue per desk	$65.60	$74.50	$8.90
Costs per desk	$37.55	$43.70	$6.15
Profit (Loss) per desk	$28.05	$30.80	$2.75
Should the company sell unfinished desks or process further and sell finished desks?	Process further and sell finished desks.