Sell-or-Process-Further Decision

P4. Bakers Bagels, Inc., produces and sells 20 types of bagels by the dozen. Bagels are priced at $6.00 per dozen (or $0.50 each) and cost $0.20 per unit to produce. The company is considering further processing the bagels into two products: bagels with cream cheese and bagel sandwiches. It would cost an additional $0.50 per unit to pro- duce bagels with cream cheese, and the new selling price would be $2.50 each. It would cost an additional $1.00 per sandwich to produce bagel sandwiches, and the new selling price would be $3.50 each. Required 1. Identify the relevant per-unit costs and revenues for the alternatives. Are there any sunk costs? 2. Based on the information in requirement 1, should Bakers Bagels expand its prod- uct offerings? 3. Accounting Connection ? Suppose that Bakers Bagels did expand its product line to include bagels with cream cheese and bagel sandwiches. Based on customer feedback, the company determined that it could further process those two products into bagels with cream cheese and fruit and bagel sandwiches with cheese. The com- pany