Question
help, take home quiz The production director of PT ABC is considering whether the A byproduct now shipped from its production process will remain in
help, take home quiz
The production director of PT ABC is considering whether the A byproduct now shipped from its production process will remain in its current state or will be further processed into A PLUS product. Product A sells for $ 3000 per quintal, To process product A into A PLUS product, the company must add production experts with salary of $ 9,000,000 a year, while the direct working hours required is 3000 hours (a year). The rate of direct labor is $ 3,330 per hour. The company must also lease facilities to process product A into product A plus with a lease of $ 4,000,000 per annum. The existing overhead cost that must be allocated to the A PLUS product is $ 5,000,000 per year. An estimated PLUS to be produced and sold is 10000 quintals per year, A PLUS product market price is $ 5,500 per quintal.
- calculate the amount of differential cost per year if the company chooses to further process product A into product A plus!
- Mention the type of the differential cost!
- What decisions should the company take, explain why (include your analysis)?
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