Chapter 12, Problem 27P

To determine

Sell or Process Further Decisions: Two major factors to consider whether to sell of process further is incremental revenues and avoidable costs. Incremental Revenue is the difference between Revenues earned if a decision is taken and revenue forgone, The decision may involve Further Processing a product, Make or Buy, Shutting down of a unit etc. Avoidable Fixed Costs are the costs which don’t need to be further incurred if a decision is taken.

Incremental Revenues and Avoidable Fixed Costs for Further processing a product.