Question
Cobe Company has already manufactured 21,000 units of Product A at a cost of $20 per unit. The 21,000 units can be sold at
Cobe Company has already manufactured 21,000 units of Product A at a cost of $20 per unit. The 21,000 units can be sold at this stage for $430,000. Alternatively, the units can be further processed at a $260,000 total additional cost and be converted into 5,900 units of Product B and 11,500 units of Product C. Per unit selling price for Product B is $106 and for Product C is $59. 1. Prepare an analysis that shows whether the 21,000 units of Product A should be processed further or not? Sell as is Process Further Sales Relevant costs: Manufacturing costs incurred to date Costs to process further Total relevant costs Income (loss) Incremental net income (or loss) if processed further The company should Incremental income process further
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