Question
Coco Co., owns a large processing line which segregates coconut into its components upon contract with breaker of the machine. Presently, it sells the coconut
Coco Co., owns a large processing line which segregates coconut into its components upon contract with breaker of the machine. Presently, it sells the coconut meat, juice, shell and husk to various manufacturers. A feasibility study is being made to process its components into buko pies for the meat, buko juice for the juice, flower pots for the shells and fuel briquettes for the husk. At the segregation point. you gathered the following data per unit:
Meat | Juice | Shell | Husk | |
Selling price | P4.00 | P2.00 | P1.00 | P1.00 |
Allocated joint cost | 0.13 | 0.06 | 0.03 | 0.03 |
Profit or loss | P3.87 | P1.94 | P0.97 | P0.97 |
The study shows that after further application of additional manufacturing process, the following is projected:
Meat | Juice | Shell | Husk | |
Selling price | P12.00 | P4.00 | P2.00 | P2.00 |
Additional processing cost | 3.80 | 2.90 | 1.95 | 1.95 |
Fixed cost of the plant amounts to P500,000. Interest rate is 12%. Which product should go through the additional manufacturing process?
Please show computations and explain.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started