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Cobe Company has already manufactured 23,000 units of Product A at a cost of $15 per unit. The 23,000 units can be sold at this
Cobe Company has already manufactured 23,000 units of Product A at a cost of $15 per unit. The 23,000 units can be sold at this stage for $430,000. Alternatively, the units can be further processed at a $220,000 total additional cost and be converted into 5,700 units of Product B and 11,100 units of Product C. Per unit selling price for Product B is $104 and for Product C is $56. 1. Prepare an analysis that shows whether the 23,000 units of Product A should be processed further or not? Sell as is Process Further Sales Relevant costs: Total relevant costs Income (loss) Incremental net income (or loss) if processed further The company should Childress Company produces three products, K1, S5, and G9. Each product uses the same type of direct material. K1 uses 4.6 pounds of the material, S5 uses 4.1 pounds of the material, and G9 uses 5.8 pounds of the material. Demand for all products is strong, but only 51,000 pounds of material are available. Information about the selling price per unit and variable cost per unit of each product follows. Selling price Variable costs K1 $175.52 101.00 S5 $121.31 84.00 G91 $223.02 154.00 Calculate the contribution margin per pound for each of the three products. Orders for which product should be produced and filled first, then second, and then third? (Round your answers to 2 decimal places.) Contribution margin per pound Product K1 Product S5 Product G9 Contribution margin per pound Order in which products should be produced and filled
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