Answered: Sell as is Process Further Sales…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 13MC: A responsibility center structure that considers investments made by the operating segments by using...

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Cobe Company has already manufactured 20,000 units of Product A at a cost of $30 per unit. The 20,000 units can be sold at this stage for $490,000. Alternatively, the units can be further processed at a $300,000 total additional cost and be converted into 5,900 units of Product B and 11,400 units of Product C. Per unit selling price for Product B is $102 and for Product C is $59.

1. Prepare an analysis that shows whether the 20,000 units of Product A should be processed further or not?

Sell as is
Process Further
Sales
Relevant costs:
Total relevant costs
Income (loss)
Incremental net income (or loss) if processed further
The company should

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