Cobe Company has already manufactured 24,000 units of Product A at a cost of $15
ID: 2501124 • Letter: C
Question
Cobe Company has already manufactured 24,000 units of Product A at a cost of $15 per unit. The 24,000 units can be sold at this stage for $420,000. Alternatively, the units can be further processed at a $230,000 total additional cost and be converted into 5,900 units of Product B and 11,900 units of Product C. Per unit selling price for Product B is $101 and for Product C is $56.
Prepare an analysis that shows whether the 24,000 units of Product A should be processed further or not.
Cobe Company has already manufactured 24,000 units of Product A at a cost of $15 per unit. The 24,000 units can be sold at this stage for $420,000. Alternatively, the units can be further processed at a $230,000 total additional cost and be converted into 5,900 units of Product B and 11,900 units of Product C. Per unit selling price for Product B is $101 and for Product C is $56.
Explanation / Answer
Answer:
Product A should be processed further.
Processed Further Particulars Not Processed Further Product B Product C Sale 420000 595900 666400 Less: cost 360000 230000 230000 Profit 60000 365900 436400