Question
Cobe Company has already manufactured 23,000 units of Product A at a cost of $25 per unit. The 23,000 units can be sold at
Cobe Company has already manufactured 23,000 units of Product A at a cost of $25 per unit. The 23,000 units can be sold at this stage for $420,000. Alternatively, the units can be further processed at a $210,000 total additional cost and be converted into 5,700 units of Product B and 11,800 units of Product C. Per unit selling price for Product B is $109 and for Product C is $55. 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 420,000 Sales Relevant costs: 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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Fundamental accounting principle
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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