Golden Trophy Inc. manufactures trophies and other promotional awards. The company uses an extrusion process in which metals and plastic are molded into a metal base of different sizes and shapes. Managers can either sell the unfinished base to other trophy companies, or incur additional conversion costs to convert it into a finished trophy. The cost incurred to produce the metal bases is $360,000, which is allocated to the products based on the sales value of the metal base. Following is information concerning the products that can be produced:

Required:

1. Which costs are relevant to the decision to sell or process further?

2. Which products should be sold as an unfinished base and which should be further processed?

3. Assume that the $360,000 in costs is allocated based on the number of units of output. Which products should be sold as an unfinished base and which should be further processed?

Transcribed Image Text:

Selling Price of Selling Price of the Finished Trophy $110.80 118.50 146.50 Additional Processing Cost Product Number of Units Trophy A Trophy B Trophy C 4,500 6,200 980 the Metal Vase $105.00 124.30 $46,200 85,500 22,450 92.00