Question
Process or Sell Product A is produced for $3.54 per pound. Product A can be sold without additional processing for $4.01 per pound, or processed
Process or Sell
Product A is produced for $3.54 per pound. Product A can be sold without additional processing for $4.01 per pound, or processed further into Product B at an additional cost of $0.44 per pound. Product B can be sold for $4.34 per pound.
Prepare a differential analysis dated September 17, on whether to sell A (Alternative 1) or process further into B (Alternative 2). If required, round your answers to the nearest whole dollar.
Differential Analysis | |||
Sell Product A (Alt. 1) or Process Further into Product B (Alt. 2) | |||
September 17 | |||
Sell Product A (Alternative 1) | Process Further into Product B (Alternative 2) | Differential Effect on Income (Alternative 2) | |
Revenues, per pound | $ | $ | $ |
Costs, per pound | |||
Income (Loss), per pound | $ | $ | $ |
Should Product A be sold (Alternative 1) or processed further into Product B (Alternative 2)?
Accept Business at Special Price
Product D is normally sold for $45 per unit. A special price of $36 is offered for the export market. The variable production cost is $26 per unit. An additional export tariff of 15% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order.
Prepare a differential analysis dated July 7, on whether to reject (Alternative 1) or accept (Alternative 2) the special order. If required, round your answers to two decimal places. If an amount is zero, enter zero "0".
Differential Analysis | |||
Reject Order (Alt. 1) or Accept Order (Alt. 2) | |||
July 7 | |||
Reject Order (Alternative 1) | Accept Order (Alternative 2) | Differential Effect on Income (Alternative 2) | |
Revenues, per unit | $ | $ | $ |
Costs: | |||
Variable manufacturing costs, per unit | |||
Export tariff, per unit | |||
Income (Loss), per unit | $ | $ | $ |
Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?
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