11. Sell or process further. In producing Ergon, a by-product, Bygon, is also made and is sold for$20 per ton. The company is considering combining additional chemicals with Bygon to producelow-grade fertilizer, to be called Exton, and sold to wholesalers at $12 per 100 pounds. The chemicals would be added to Bygon at the rate of 40 pounds per 100 pounds of by-product. Additional2500000costs would be:Chemicals.Direct laborVariable factory overhead..$7.00 per 100 pounds of input3.00 per 100 pounds of output1.50 per 100 pounds of output100= 25000While present facilities are adequate to produce Exton, $40,000 in additional annual promo-tion and advertising costs would be incurred. The current volume of Bygon is 2,500,000 pounds, or(12-11-5)=) 0.5*25000 125001,250 tons.Required: Recommendation to sell Bygon or process further to produce Exton.(.

Name: 11. Sell or process further. In producing Ergon, a by-product, Bygon,
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Description: 11. Sell or process further. In producing Ergon, a by-product, Bygon, is also made and is sold for$20 per ton. The company is considering combining additional chemicals with Bygon to producelow-grade fertilizer, to be called Exton, and sold to whole

The decision to sell a product now or process it further to get more revenue is known as "sell or…

Business

Accounting

11. Sell or process further. In producing Ergon, $20 per ton. The company is considering combining additional chemicals with Bygon to produce low-grade fertilizer, to be called Exton, and sold to wholesalers at $12 per 100 pounds. The chemi cals would be added to Bygon at the rate of 40 pounds per 100 pounds of by-product. Additional 250000 100 costs would be: = 25000 Chemicals. Direct labor Variable factory overhead. $7.00 per 100 pounds of input 3.00 per 100 pounds of output 1.50 per 100 pounds of output While present facilities are adequate to produce Exton, $40,000 in additional annual promo- tion and advertising costs would be incurred. The current volume of Bygon is 2,500,000 pounds, or (12-11-5)=) 0.5*25000 12500 1,250 tons. Required: Recommendation to sell Bygon or process further to produce Exton.

11. Sell or process further. In producing Ergon, $20 per ton. The company is considering combining additional chemicals with Bygon to produce low-grade fertilizer, to be called Exton, and sold to wholesalers at $12 per 100 pounds. The chemi cals would be added to Bygon at the rate of 40 pounds per 100 pounds of by-product. Additional 250000 100 costs would be: = 25000 Chemicals. Direct labor Variable factory overhead. $7.00 per 100 pounds of input 3.00 per 100 pounds of output 1.50 per 100 pounds of output While present facilities are adequate to produce Exton, $40,000 in additional annual promo- tion and advertising costs would be incurred. The current volume of Bygon is 2,500,000 pounds, or (12-11-5)=) 0.5*25000 12500 1,250 tons. Required: Recommendation to sell Bygon or process further to produce Exton.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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