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Cobe Company has already manufactured 18,000 units of Product A at a cost of $25 per unit. The 18,000 units can be sold at this
Cobe Company has already manufactured 18,000 units of Product A at a cost of $25 per unit. The 18,000 units can be sold at this stage for $430,000. Alternatively, the units can be further processed at a $280,000 total additional cost and be converted into 5,100 units of Product B and 11,300 units of Product C. Per unit selling price for Product B is $105 and for Product C is $51 1. Prepare an analysis that shows whether the 18,000 units of Product A should be processed further or not. Sell as is Process Further Sales Relevant costs: Costs to process further S 430,000 280,000 Total relevant costs 280,000 Income (loss) S 430,000 Incremental net income (or loss) if processed $ 473,500 Incremental income further The company should process further
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