Woodmasters Inc. makes tables. The cost to manufacture an unfinished table is $35. The selling price per unfinished unit is $50. Woodmasters has unused capacity that can be used to finish the tables and sell them at $60 per unit. For a finished table, direct materials will increase $2 and direct labor costs will increase $4. Variable manufacturing overhead costs will increase by $2.40 (60% of direct labor). No increase is anticipated in fixed manufacturing overhead. Which of the following statement is correct?

To gain higher profit, the company should sell the unfinished product as it is.

To gain higher profit, the company should process further and sell the finished product.

The company will incur a loss by further processing the product.

The company will incur a loss by selling unfinished product.

Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Manufacturing cost per unit $15 10 6 4 $35