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Firefox File Edit View History Bookmarks Tools Window Help ???94% Ct} Sat 6:34 PM Arika Ishtiaq a E Oracle PeopleSoft Sign-in hcc canvas . Google Search Accounting question Chegg.c . Search Ch 10 Ex 10-8 6 Saved Help Save & Exit Submit Sig Check my work Exercise 10-8 Sell or process further LO A1 Cobe Company has already manufactured 22,000 units of Product A at a cost of $25 per unit. The 22,000 units can be sold at this stage for $500,000. Alternatively, the units can be further processed at a $300,000 total additional cost and be converted into 5,200 units of Product B and 11,900 units of Product C. Per unit selling price for Product B is $103 and for Product C is $52 1. Prepare an analysis that shows whether the 22,000 units of Product A should be processed further or not. Hint Ask Sell as is Process Further Sales Print Relevant costs Total relevant costs Income (loss) Incremental net income (or loss) if processed The company should Prev 1 of 1 Next 988

Solution

Answers

Sell as is

Process further

Sales

$ 500,000.00

$   1,154,400.00

Relevant Costs:

Manufacturing cost

$ 550,000.00

$      550,000.00

Additional further processing cost

$                   -  

$      300,000.00

Total relevant cost

$ 550,000.00

$      850,000.00

Income (Loss)

$ (50,000.00)

$      304,400.00

Incremental Net Income (or loss) if processed further

$      354,400.00

The company should

Process further and then sell

Sell as is

Process further

Sales

500000

=+(5200*103)+(11900*52)

Relevant Costs:

manufacturing cost

=22000*25

=22000*25

Additional further processing cost

0

300000

Total relevant cost

Income (Loss)

500000 - 550000

1154400 – 550000 – 300000

Incremental Net Income (or loss) if processed further

=304400+50000

	Sell as is	Process further
Sales	$ 500,000.00	$   1,154,400.00
Relevant Costs:
Manufacturing cost	$ 550,000.00	$      550,000.00
Additional further processing cost	$                   -	$      300,000.00
Total relevant cost	$ 550,000.00	$      850,000.00
Income (Loss)	$ (50,000.00)	$      304,400.00
Incremental Net Income (or loss) if processed further		$      354,400.00
The company should		Process further and then sell