Question

Cobe Company has already manufactured 20,000 units of Product A
at a cost of $25 per unit. The 20,000 units can be sold at this
stage for $410,000. Alternatively, the units can be further
processed at a $250,000 total additional cost and be converted into
5,900 units of Product B and 11,400 units of Product C. Per unit
selling price for Product B is $108 and for Product C is $59.

**1.** Prepare an analysis that shows whether the
20,000 units of Product A should be processed further or not?

Answer #1

Answer - Product A should be processed further as there is
**Incremental income of $649,800**

**Explanation**:

**Particulars Sell Process further**

Sales $410,000 $1,309,800

Relevant cost

Process further cost $0 $250,000

Less: Total relevant cost $0 $250,000

Income $410,000 $1,059,800

**Incremental income $649,800**

The $1,309,800 is come from

= 5,900 units × $108 + 11,400 units × $59

= $637,200 + $672,600

= $1,309,800

**Therefore, the company should process
further**

In case of any query, please ask in comment section

Cobe Company has already manufactured 24,000 units of Product A
at a cost of $15 per unit. The 24,000 units can be sold at this
stage for $410,000. Alternatively, the units can be further
processed at a $250,000 total additional cost and be converted into
5,300 units of Product B and 11,000 units of Product C. Per unit
selling price for Product B is $108 and for Product C is $53.
1. Prepare an analysis that shows whether the
24,000...

Cantrell Company has already manufactured 20,000 units of
Product A at a cost of $20 per unit. The 20,000 units can be sold
at this stage for $570,000. Alternatively, the units can be further
processed at a $440,000 total additional cost and be converted into
4,800 units of Product B and 7,300 units of Product C. Per unit
selling price for Product B is $73 and for Product C is $59.
1.
Calculate the Incremental Net Profit (or loss)...

Cantrell Company has already manufactured 19,000 units of
Product A at a cost of $30 per unit. The 19,000 units can be sold
at this stage for $590,000. Alternatively, the units can be further
processed at a $440,000 total additional cost and be converted into
4,800 units of Product B and 7,100 units of Product C. Per unit
selling price for Product B is $75 and for Product C is $55.
1.
Calculate the Incremental Net Profit (or loss)...

Smith Holdings produces a product that can be sold as-is or
processed further. Johnson has already spent $50,000 to produce
1,250 units that can be sold now for $67,500 to another
manufacturer. Alternatively, Johnson can process the units further
at an incremental cost of $250 per unit. If Johnson does process
further, the units could be sold for $375 each. Compute the
incremental income (or loss) if Johnson processes further.

Encore Corp. has 280 units of finished product in inventory that
originally cost $70,000 to manufacture. It could be sold as scrap
to a buyer in Brazil for $42,000 minus transportation cost of $15
per unit. Alternatively, the 280 units of inventory could be sold
domestically for $62,000 if it is processed further at an
additional cost. Encore processes the old inventory further, but
that decision results in a decrease in Encore's net income of
$3,000. Calculate the additional processing...

It costs Camp, Inc. $48 per unit to manufacture 1,000 units per
month of a product that it can sell for $75 each. Alternatively,
Camp could process the units further into a more complex product,
which would cost an additional $41 per unit. Camp could sell the
more complex product for $110 each. How would processing the
product further affect Camp's profit?

1. A company has already incurred a
$55,000 cost in partially producing its three products. Their
selling prices when partially and fully processed are shown in the
following table with the additional costs necessary to finish their
processing. Based on this information, should any products be
processed further?
Product
Unfinished Selling Price
Finished Selling Price
Further
Processing Costs
A
$72
$108
$35
B
83
124
40
C
94
141
45
Multiple Choice
All of these products should be processed further....

Process or Sell
Product A is produced for $3.56 per pound. Product A can be sold
without additional processing for $4.22 per pound or processed
further into Product B at an additional cost of $0.36 per pound.
Product B can be sold for $4.38 per pound.
Prepare a differential analysis dated November 15 on whether to
sell A (Alternative 1) or process further into B (Alternative 2).
If required, round your answers to the nearest whole dollar. For
those boxes...

Process or Sell
Product A is produced for $3.48 per pound. Product A can be sold
without additional processing for $4.19 per pound or processed
further into Product B at an additional cost of $0.39 per pound.
Product B can be sold for $4.44 per pound.
Prepare a differential analysis dated November 15 on whether to
sell A (Alternative 1) or process further into B (Alternative 2).
If required, round your answers to the nearest whole dollar. For
those boxes...

A company has the capacity to produce 20,000 units of its
product per year. It is currently only producing 13,000 units per
year, with a sell price of $70 per unit. A customer has placed a
special order for 6,500 units at $62 per unit. The incremental cost
of accepting the special order is $382,000.
Should the company accept the special order?

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