Question

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?

Answer #1

*Solution:*

For product having sale price of $75 per unit:

Manufacturing cost = $48*1000 units = $48000

Sales revenue = $75*1000 units = $75000

Therefore, Profit = $75000-$48000 = $27000

For product having sale price of $110 per unit:

Manufacturing Cost = ($48+$41)*1000 units = $89000

Sales revenue = $110*1000 units = $110000

Therefore, Profit = $110000-$89000 = $21000

Hence it is clear from the above calculation that processing the product further will decrease Camp's profit by $6000 ($27000-$21000).

38.It costs Bodhis, Inc. $70 per unit to manufacture 1,000 units
per month of a product that it can sell for $100 each.
Alternatively, Bodhis could process the units further into a more
complex product, which would cost an additional $40 per unit.
Bodhis could sell the more complex product for $145 each. How would
processing the product futher affect Bodhis's profit?
.
42 Jasmine Company produces hand tools. A sales budget for the
next four months is as follows:...

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)...

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)...

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...

Maple Inc. manufactures a product that costs $21 per unit plus
$46,000 in fixed costs each month. Maple currently sells 5,000 of
these units per month for $43 each. If Maple leased a machine for
$10,000 a month, it could add features to the product that would
allow it to sell for $46 each. It would cost an additional $4 per
unit to add these features. How much would Maple's profit be
affected if it leased the machine and added...

Elmwood, Inc. currently sells 13,000 units of its product per
year for $110 each. Variable costs total $85 per unit. Elmwood’s
manager believes that if a new machine is leased for $224,250 per
year, modifications can be made to the product that will increase
its retail value. These modifications will increase variable costs
by $15.00 per unit, but Elmwood is hoping to sell the modified
units for $140 each.
a-1. Should Elmwood modify the units or sell them
as is?...

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...

Our company produces a product that is currently sold for $70
per unit. We are considering processing it further into an upgraded
version of the current product. If we do so, we can sell the
product for $90, we will incur additional costs of $395,000, and we
can sell 20,000 units
Which of the following is true?
Sell now at $70 since doing so will maximize operating
income.
Process further because operating income will increase by
$5,000.
Process further because...

Lakeside Inc. produces a product that currently sells for $66.60
per unit. Current production costs per unit include direct
materials, $27; direct labor, $29; variable overhead, $13.50; and
fixed overhead, $13.50. Product engineering has determined that
certain production changes could refine the product quality and
functionality. These new production changes would increase material
and labor costs by 20% per unit.
Required:
a. What would be the incremental profit or loss if
Lakeside could sell the refined version of its product...

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...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 10 minutes ago

asked 22 minutes ago

asked 30 minutes ago

asked 35 minutes ago

asked 39 minutes ago

asked 41 minutes ago

asked 47 minutes ago

asked 49 minutes ago

asked 49 minutes ago

asked 50 minutes ago

asked 1 hour ago

asked 1 hour ago