Answered: xercise 13-13 (Algo) Sell or Pro

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 4PB

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Exercise 13-13 (Algo) Sell or Process Further Decision [LO13-7]

Wexpro, Incorporated, produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $69,000 per ton, one-fourth of which is allocated to product X15. Seven thousand five hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $12 each, or processed further at a total cost of $9,200 and then sold for $18 each.

Required:

1. What is the financial advantage (disadvantage) of further processing product X15?

2. Should product X15 be processed further or sold at the split-off point?

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Decision to Sell before or after additional processing

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