Varto Company has 9,600 units of its product in inventory that it produced last year at a cost of $151,000. This year's model is better than last year's, and the 9,600 units cannot be sold at last year's normal selling price of $42 each. Varto has two alternatives for these units: (1) They can be sold as is to a wholesaler for $76,800 or (2) they can be processed further at an additional cost of $227,300 and then sold for $297,600. (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 Answer is not complete. Sell As Is 76,800 $ Process Further 297,600
Varto Company has 9,600 units of its product in inventory that it produced last year at a cost of $151,000. This year's model is better than last year's, and the 9,600 units cannot be sold at last year's normal selling price of $42 each. Varto has two alternatives for these units: (1) They can be sold as is to a wholesaler for $76,800 or (2) they can be processed further at an additional cost of $227,300 and then sold for $297,600. (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 Answer is not complete. Sell As Is 76,800 $ Process Further 297,600
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Varto Company has 9,600 units of its product in inventory that it produced last year at a cost of $151,000. This year's model is better
than last year's, and the 9,600 units cannot be sold at last year's normal selling price of $42 each. Varto has two alternatives for these
units: (1) They can be sold as is to a wholesaler for $76,800 or (2) they can be processed further at an additional cost of $227,300 and
then sold for $297,600.
(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:
Answer is not complete.
Sell As Is
$
$
76,800 $
151,000 X
227,800 $
Process Further
297,600
448,600X
(151,000)
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