Answered: Paola Farms, Inc. produces a crop of… | bartleby

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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## Question 6

Paola Farms, Inc. produces a crop of chickens at a total cost of $66,000. The production generates 60,000 chickens which can be sold for $1 each to a slaughtering company, or the chickens can be slaughtered in-house and then sold for $2.50 each. It costs $65,000 more to turn the annual chicken crop into chicken meat.

### Questions:
1. If Paola Farms slaughters the chickens, how much incremental profit or loss would it report?

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2. Should Paola Farms slaughter the chickens before selling?

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## Question 7

Elmdale Company has a machine that affixes labels to bottles. The machine has a book value of $80,000 and a remaining useful life of 3 years and no salvage value. A new, more efficient machine is available.

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Sandhill, Inc. produces a crop of chickens at a total cost of $78,800. The production generates 72.000 chickens which can be sold for $2 each to a slaughtering company, or the chickens can be slaughtered in house and then sold for $3.75 each. It costs $78,000 more to turn the annual chicken crop into chicken meat. (a) If Sandhill slaughters the chickens, determine how much incremental profit or loss it would report.
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