Varto Company has 7,200 units of its product in inventory that it produced last year at a cost of $158,000. This year's model is better than last year's, and the 7,200 units cannot be sold at last year's normal selling price of $36 each. Varto has two alternatives for these units: (1) They can be sold as is to a wholesaler for $93,600 or (2) they can be processed further at an additional cost of $114,300 and then sold for $201,600. (a) Prepare a sell as is or process further analysis of income effects. (b) Should Varto sell the products as is or process further and then sell them? (a) Sell or Process Analysis Revenue Costs Income Incremental income (loss) to sell as is (b) The company should: S $ Sell As Is Sell as is 93,600 $ 0 93,600 $ Process Further 201,600 (114,300) 87,300

Varto Company has 7,200 units of its product in inventory that it produced last year at a cost of $158,000. This year's model is better than last year's, and the 7,200 units cannot be sold at last year's normal selling price of $36 each. Varto has two alternatives for these units: (1) They can be sold as is to a wholesaler for $93,600 or (2) they can be processed further at an additional cost of $114,300 and then sold for $201,600. (a) Prepare a sell as is or process further analysis of income effects. (b) Should Varto sell the products as is or process further and then sell them? (a) Sell or Process Analysis Revenue Costs Income Incremental income (loss) to sell as is (b) The company should: S $ Sell As Is Sell as is 93,600 $ 0 93,600 $ Process Further 201,600 (114,300) 87,300

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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