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Cobe Company has already manufactured 20,000 units of Product A at a cost of $25 per unit. The 20,000 units can be sold at this
Cobe Company has already manufactured 20,000 units of Product A at a cost of $25 per unit. The 20,000 units can be sold at this stage for $410,000. Alternatively, the units can be further processed at a $290,000 total additional cost and be converted into 5,900 units of Product B and 11,000 units of Product C. Per unit selling price for Product B is $106 and for Product C is $53. 1. Prepare an analysis that shows whether the 20,000 units of Product A should be processed further or not? Sales Relevant costs: Costs to process further Total relevant costs Income (loss) Sell as is Process Further $ 410,000 Incremental net income (or loss) if processed further The company should 290,000 290,000 Incremental income process further
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