Explain an example of sell or process of further decision.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Explain an example of sell or process of further decision.

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Sell or process of further decision is taken to decide whether to sell a product a certain point in a production line or sell it after processing further.

In order to decide whether to sell or process further of a product, net benefit from further processing has to be calculated and if such net benefit from further processing is positive then it should be further processed and if it is negative it is better to sell the product without further processing.

Net benefit from further processing = Incremental revenue - further processing costs

Incremental revenue is difference between price of product before processing and after processing.

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