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A Company belonging to the process industry carries out three consecutive processes. The output of the first Process is taken as input of the second process, and the output of the second process is taken as input of the Third process. The final product emerges out of the third process. It is also possible to outsource the intermediate Products. It has been found that over a period of time cost of production of the first process is 10% higher than The market price of the intermediate product, available freely in the market. The company has decided to close Down the first process as a measure of cost saving (vertical spin off) and outsource. Should this event be treated As discontinuing operation?

A Company belonging to the process industry carries out three consecutive processes. The output of the first Process is taken as input of the second process, and the output of the second process is taken as input of the Third process. The final product emerges out of the third process. It is also possible to outsource the intermediate Products. It has been found that over a period of time cost of production of the first process is 10% higher than The market price of the intermediate product, available freely in the market. The company has decided to close Down the first process as a measure of cost saving (vertical spin off) and outsource. Should this event be treated As discontinuing operation?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A Company belonging to the process industry carries out three consecutive processes. The output of the first Process is taken as input of the second process, and the output of the second process is taken as input of the Third process. The final product emerges out of the third process. It is also possible to outsource the intermediate Products. It has been found that over a period of time cost of production of the first process is 10% higher than The market price of the intermediate product, available freely in the market. The company has decided to close Down the first process as a measure of cost saving (vertical spin off) and outsource. Should this event be treated As discontinuing operation?
Transcribed Image Text:A Company belonging to the process industry carries out three consecutive processes. The output of the first Process is taken as input of the second process, and the output of the second process is taken as input of the Third process. The final product emerges out of the third process. It is also possible to outsource the intermediate Products. It has been found that over a period of time cost of production of the first process is 10% higher than The market price of the intermediate product, available freely in the market. The company has decided to close Down the first process as a measure of cost saving (vertical spin off) and outsource. Should this event be treated As discontinuing operation?
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