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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
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: Number of Selling Price of Unfinished Fabric Selling Price after Processing Further Additional Processing Cost Product Pants Shirts Coats Units 6,000 12,000 4,000 $20.00 23.20 38.80 $30.00 32.40 43.20 $28,450 64,400 18,300 Required 2-a. Calculate the increase or decrease in profit if the products are processed further. (Enter all values as positive values.) Profit Pants Shirts Coats
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