Cobe Company has already manufactured 18,000 units of Product A at a cost of $20 per unit. The 18,000 units can be sold at this stage for $480,000. Alternatively, the units can be further processed at a $260,000 total additional cost and be converted into 5,600 units of Product B and 11,000 units of Product C. Per unit selling price for Product B is $105 and for Product C is $53. 1. Prepare an analysis that shows whether the 18,000 units of Product A should be processed further or not? Sales Relevant costs: Total relevant costs Income (loss) Sell as is Incremental net income (or loss) if processed further The company should Process Further

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Cobe Company has already manufactured 18,000 units of Product A at a cost of $20 per unit. The 18,000 units can be sold at this
stage for $480,000. Alternatively, the units can be further processed at a $260,000 total additional cost and be converted into 5,600
units of Product B and 11,000 units of Product C. Per unit selling price for Product B is $105 and for Product C is $53.
1. Prepare an analysis that shows whether the 18,000 units of Product A should be processed further or not?
Sales
Relevant costs:
Total relevant costs
Income (loss)
Sell as is
Incremental net income (or loss) if processed further
The company should
Process Further
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Transcribed Image Text:Cobe Company has already manufactured 18,000 units of Product A at a cost of $20 per unit. The 18,000 units can be sold at this stage for $480,000. Alternatively, the units can be further processed at a $260,000 total additional cost and be converted into 5,600 units of Product B and 11,000 units of Product C. Per unit selling price for Product B is $105 and for Product C is $53. 1. Prepare an analysis that shows whether the 18,000 units of Product A should be processed further or not? Sales Relevant costs: Total relevant costs Income (loss) Sell as is Incremental net income (or loss) if processed further The company should Process Further < Prev 2 of 11 Next >
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