Chino Company manufactures fabric and clothing. Managers can either sell the unfinished fabric to other clothing manufacturers or incur additional conversion costs to create a finished garment. The costs incurred to produce the unfinished fabric are $400,000, which are allocated to the products based on the sales value of the unfinished fabric. Following is information concerning the clothing that can be produced from the fabric:

Product	# of units	Selling price of Unfinished Fabric	Selling price after processing further	Addtional Processing cost
Pants	6,000	$20.00	$30.00	$28,450
Shirts	12,000	$23.20	$32.40	$64,400
Coats	4,000	$38.80	$43.20	$18,300

1a.

Calculate the increase or decrease in profit if the products are processed further. (Enter all values as positive values.

	Profit
Pants
Shirts
Coats

1b. Which products should be sold as unfinished fabirc and which sohuld be prosessed futher?

	Action
Pants
Shits
Coats

3. Assume that the $400,000 in costs is allocated based on the number of units of output. Which products should be sold as unfinished fabric and which should be further processed?

	Action
Pants
Shirts
Coats