Sell or Process Further Jensen Manufacturing Company makes a partially completed assembly unit that it sells for $36 per unit. Normally, 42,000 units are sold each year. Variable unit cost data on the assembly are as follows: Direct material Direct labor $10 8 Variable manufacturing overhead 4 The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for $43 per unit. If the company does this, material and labor costs will each increase by $2 per unit and variable overhead will go up by $1 per unit. Fixed costs will increase from the current level of $160,000 to $220,000. Prepare an analysis showing whether Jensen should process the assemblies further. Use a negative sign with answer to only indicate an income loss from processing assemblies further; otherwise do not use negative signs with your answers. Sell of Process Further Differential Analysis Differential revenue Differential costs Direct material Direct labor Variable overhead Fixed costs $Answer Answer Answer Answer Answer Additional income (loss) from processing further $Answer

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Chapter10: Short-term Decision Making
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Sell or Process Further
Jensen Manufacturing Company makes a partially completed assembly unit that it sells for $36 per unit. Normally, 42,000
units are sold each year. Variable unit cost data on the assembly are as follows:
Direct material
Direct labor
$10
8
Variable manufacturing overhead
4
The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the
assembly further and selling it for $43 per unit. If the company does this, material and labor costs will each increase by $2
per unit and variable overhead will go up by $1 per unit. Fixed costs will increase from the current level of $160,000 to
$220,000.
Prepare an analysis showing whether Jensen should process the assemblies further.
Use a negative sign with answer to only indicate an income loss from processing assemblies further; otherwise do not use
negative signs with your answers.
Sell of Process Further Differential Analysis
Differential revenue
Differential costs
Direct material
Direct labor
Variable overhead
Fixed costs
$Answer
Answer
Answer
Answer
Answer
Additional income (loss) from processing further $Answer
Transcribed Image Text:Sell or Process Further Jensen Manufacturing Company makes a partially completed assembly unit that it sells for $36 per unit. Normally, 42,000 units are sold each year. Variable unit cost data on the assembly are as follows: Direct material Direct labor $10 8 Variable manufacturing overhead 4 The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for $43 per unit. If the company does this, material and labor costs will each increase by $2 per unit and variable overhead will go up by $1 per unit. Fixed costs will increase from the current level of $160,000 to $220,000. Prepare an analysis showing whether Jensen should process the assemblies further. Use a negative sign with answer to only indicate an income loss from processing assemblies further; otherwise do not use negative signs with your answers. Sell of Process Further Differential Analysis Differential revenue Differential costs Direct material Direct labor Variable overhead Fixed costs $Answer Answer Answer Answer Answer Additional income (loss) from processing further $Answer
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