80.2K

Verified Solution

Link Copied!

Exercise 23-3 Sell or process further LO P2 Cobe Company has already manufactured 20,000 units of Product A at a cost of $15 per unit. The 20,000 units can be sold at this stage for $490,000. Alternatively, the units can be further processed at a $210,000 total additional cost and be converted into 5400 units of Product B and 11,900 units of Product C. Per unit selling price for Product B is $104 and for Product is $52 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 (095) Incrementalne income for oss) processed further The company should Exercise 23-4 Scrap or rework LO P2 A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that cost $6.00 per unit to manufacture. The units can be a) sold as is for $320 each, or b) reworked for $4.90 each and then sold for the full price of $9.20 each What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.) Sale as Scrap $ 51.200 Rework Sales of reworked units Cost to rework units Sales of scrap units Incremental income (s) $ 51,200 $ 0 The company should

Answer & Explanation Solved by verified expert

See Answer