Question
Turner Manufacturing Company makes a partially completed assembly unit that it sells for $55 per unit. Normally, 33,000 units are sold each year. Variable unit
Turner Manufacturing Company makes a partially completed assembly unit that it sells for $55 per unit. Normally, 33,000 units are sold each year. Variable unit cost data on the assembly are as follows: Direct material $12 Direct labor 7 Variable manufacturing overhead 9 The company is now using only 75% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for $63 per unit. If the company does this, material and labor costs will each increase by $2 per unit and variable overhead will go up by $1 per unit. Fixed costs will increase from the current level of $125,000 to $163,000. Prepare an analysis showing whether Turner should process the assemblies further. Use a negative sign with answer to only indicate a loss from processing assemblies further; otherwise do not use negative signs with your answers.
Sell of Process Further Differential Analysis
Differential revenue $
Differential costs$
Direct material$
Direct labor$
Variable overhead$
Fixed costs$
Additional income (loss) from processing further$
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