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Lakeland Co. has already manufactured 18,000 units of Product X at a cost of $15 per unit. The 18,000 units can be sold at this stage for $460,000. Alternatively, the units can be further processed at a $230,000 total additional cost and be converted into 5,500 units of Product Y and 11,800 units of Product Z. Per unit selling price for Product Y is $100 and for Product Z is $51. 1. Prepare an analysis that shows whether the 18,000 units of Product X 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

Lakeland Co. has already manufactured 18,000 units of Product X at a cost of $15 per unit. The 18,000 units can be sold at this stage for $460,000. Alternatively, the units can be further processed at a $230,000 total additional cost and be converted into 5,500 units of Product Y and 11,800 units of Product Z. Per unit selling price for Product Y is $100 and for Product Z is $51. 1. Prepare an analysis that shows whether the 18,000 units of Product X 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
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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am. 263.

**Educational Analysis: Analyzing Further Processing of Product X** Lakeland Co. has an opportunity to decide whether to sell its already manufactured 18,000 units of Product X at a current stage or process them further. Here's a breakdown provided for decision-making: ### Background Information: - **Initial Manufacturing Cost:** 18,000 units of Product X at $15 per unit. - **Sell as is Option:** Can be sold for $460,000. - **Process Further Option:** - Additional Cost for Processing: $230,000. - Resulting Products: 5,500 units of Product Y and 11,800 units of Product Z. - Selling Prices: $100 per unit for Product Y and $51 per unit for Product Z. ### Analysis Table: **Objective**: Prepare an analysis to determine if processing the 18,000 units further is beneficial. #### Table Overview: | | Sell as is | Process Further | |-----------------------|------------|-----------------| | **Sales** | | | | **Relevant Costs:** | | | | | | | | | | | | **Total Relevant Costs** | | | | **Income (Loss)** | | | | | | | | **Incremental Net Income (or loss) if processed further** | | | | **The company should** | | | ### Instructions for Completion: - Calculate the total sales, relevant costs, total costs, and income/loss for both options. - Determine the incremental net income or loss if the product is processed further. - Based on the analysis, conclude whether the company should sell as is or process further, providing a recommendation. This analysis is essential for making informed financial decisions.
Transcribed Image Text:**Educational Analysis: Analyzing Further Processing of Product X** Lakeland Co. has an opportunity to decide whether to sell its already manufactured 18,000 units of Product X at a current stage or process them further. Here's a breakdown provided for decision-making: ### Background Information: - **Initial Manufacturing Cost:** 18,000 units of Product X at $15 per unit. - **Sell as is Option:** Can be sold for $460,000. - **Process Further Option:** - Additional Cost for Processing: $230,000. - Resulting Products: 5,500 units of Product Y and 11,800 units of Product Z. - Selling Prices: $100 per unit for Product Y and $51 per unit for Product Z. ### Analysis Table: **Objective**: Prepare an analysis to determine if processing the 18,000 units further is beneficial. #### Table Overview: | | Sell as is | Process Further | |-----------------------|------------|-----------------| | **Sales** | | | | **Relevant Costs:** | | | | | | | | | | | | **Total Relevant Costs** | | | | **Income (Loss)** | | | | | | | | **Incremental Net Income (or loss) if processed further** | | | | **The company should** | | | ### Instructions for Completion: - Calculate the total sales, relevant costs, total costs, and income/loss for both options. - Determine the incremental net income or loss if the product is processed further. - Based on the analysis, conclude whether the company should sell as is or process further, providing a recommendation. This analysis is essential for making informed financial decisions.
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