Sell or Process Further Decisions: A company may have to take a decision to sell a product without processing or selling it after further processing. In this decision making the Profit under both the options are compared and decision is taken for the higher profit option. If the company should sell the product or process it further

Question

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Answer 1

Question

Chapter 16, Problem 16.1ME

To determine

Concept Introduction:

Sell or Process Further Decisions:

A company may have to take a decision to sell a product without processing or selling it after further processing. In this decision making the Profit under both the options are compared and decision is taken for the higher profit option.

If the company should sell the product or process it further

Expert Solution & Answer

Answer to Problem 16.1ME

It shall be better to sell the product without further processing.

Explanation of Solution

The decision is taken on the basis of the following analysis:

	Sell	Process Further
Sales Revenue	$ 36.00	$ 40.00
Less: Costs:
Direct Material	$ 10.00	$ 12.00
		(10*120%)
Direct labor	$ 12.00	$ 14.40
		(12*120%)
Variable Overhead	$ 5.00	$ 5.00
Fixed Overhead	$ 5.00	$ 5.00

Net Profit	$ 4.00	$ 3.60

Hence it shall be better to sell the product without further processing.

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Torso Company manufactures a single product and has a JIT policy that ending inventory must equal 25% of the next month's sales. It estimates that April's ending inventory will consist of 45,600 units. May and June sales are estimated to be 275,000 and 290,000 units, respectively. Torso assigns variable overhead at a rate of $4.10 per unit of production. Fixed overhead equals $450,000 per month. Compute the number of units to be produced and use this amount to compute the total budgeted overhead that would appear on the factory overhead budget for the month of May.

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Answer 2

Question

Chapter 16, Problem 16.1ME

To determine

Concept Introduction:

Sell or Process Further Decisions:

A company may have to take a decision to sell a product without processing or selling it after further processing. In this decision making the Profit under both the options are compared and decision is taken for the higher profit option.

If the company should sell the product or process it further

Expert Solution & Answer

Answer to Problem 16.1ME

It shall be better to sell the product without further processing.

Explanation of Solution

The decision is taken on the basis of the following analysis:

	Sell	Process Further
Sales Revenue	$ 36.00	$ 40.00
Less: Costs:
Direct Material	$ 10.00	$ 12.00
		(10*120%)
Direct labor	$ 12.00	$ 14.40
		(12*120%)
Variable Overhead	$ 5.00	$ 5.00
Fixed Overhead	$ 5.00	$ 5.00

Net Profit	$ 4.00	$ 3.60

Hence it shall be better to sell the product without further processing.

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Answer 3

Question

Chapter 16, Problem 16.1ME

To determine

Concept Introduction:

Sell or Process Further Decisions:

A company may have to take a decision to sell a product without processing or selling it after further processing. In this decision making the Profit under both the options are compared and decision is taken for the higher profit option.

If the company should sell the product or process it further

Expert Solution & Answer

Answer to Problem 16.1ME

It shall be better to sell the product without further processing.

Explanation of Solution

The decision is taken on the basis of the following analysis:

	Sell	Process Further
Sales Revenue	$ 36.00	$ 40.00
Less: Costs:
Direct Material	$ 10.00	$ 12.00
		(10*120%)
Direct labor	$ 12.00	$ 14.40
		(12*120%)
Variable Overhead	$ 5.00	$ 5.00
Fixed Overhead	$ 5.00	$ 5.00

Net Profit	$ 4.00	$ 3.60

Hence it shall be better to sell the product without further processing.

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Answer 4

Question

Chapter 16, Problem 16.1ME

To determine

Concept Introduction:

Sell or Process Further Decisions:

A company may have to take a decision to sell a product without processing or selling it after further processing. In this decision making the Profit under both the options are compared and decision is taken for the higher profit option.

If the company should sell the product or process it further

Expert Solution & Answer

Answer to Problem 16.1ME

It shall be better to sell the product without further processing.

Explanation of Solution

The decision is taken on the basis of the following analysis:

	Sell	Process Further
Sales Revenue	$ 36.00	$ 40.00
Less: Costs:
Direct Material	$ 10.00	$ 12.00
		(10*120%)
Direct labor	$ 12.00	$ 14.40
		(12*120%)
Variable Overhead	$ 5.00	$ 5.00
Fixed Overhead	$ 5.00	$ 5.00

Net Profit	$ 4.00	$ 3.60

Hence it shall be better to sell the product without further processing.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 16, Problem 16.1ME

To determine

Concept Introduction:

Sell or Process Further Decisions:

A company may have to take a decision to sell a product without processing or selling it after further processing. In this decision making the Profit under both the options are compared and decision is taken for the higher profit option.

If the company should sell the product or process it further

Expert Solution & Answer

Answer to Problem 16.1ME

It shall be better to sell the product without further processing.

Explanation of Solution

The decision is taken on the basis of the following analysis:

	Sell	Process Further
Sales Revenue	$ 36.00	$ 40.00
Less: Costs:
Direct Material	$ 10.00	$ 12.00
		(10*120%)
Direct labor	$ 12.00	$ 14.40
		(12*120%)
Variable Overhead	$ 5.00	$ 5.00
Fixed Overhead	$ 5.00	$ 5.00

Net Profit	$ 4.00	$ 3.60

Hence it shall be better to sell the product without further processing.

Answer 6

Chapter 16, Problem 16.1ME

To determine

Concept Introduction:

Sell or Process Further Decisions:

A company may have to take a decision to sell a product without processing or selling it after further processing. In this decision making the Profit under both the options are compared and decision is taken for the higher profit option.

If the company should sell the product or process it further

Expert Solution & Answer

Answer to Problem 16.1ME

It shall be better to sell the product without further processing.

Explanation of Solution

The decision is taken on the basis of the following analysis:

	Sell	Process Further
Sales Revenue	$ 36.00	$ 40.00
Less: Costs:
Direct Material	$ 10.00	$ 12.00
		(10*120%)
Direct labor	$ 12.00	$ 14.40
		(12*120%)
Variable Overhead	$ 5.00	$ 5.00
Fixed Overhead	$ 5.00	$ 5.00

Net Profit	$ 4.00	$ 3.60

Hence it shall be better to sell the product without further processing.

Answer 7

Chapter 16, Problem 16.1ME

To determine

Concept Introduction:

Sell or Process Further Decisions:

A company may have to take a decision to sell a product without processing or selling it after further processing. In this decision making the Profit under both the options are compared and decision is taken for the higher profit option.

If the company should sell the product or process it further

Answer 8

Expert Solution & Answer

Answer to Problem 16.1ME

It shall be better to sell the product without further processing.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The decision is taken on the basis of the following analysis:

	Sell	Process Further
Sales Revenue	$ 36.00	$ 40.00
Less: Costs:
Direct Material	$ 10.00	$ 12.00
		(10*120%)
Direct labor	$ 12.00	$ 14.40
		(12*120%)
Variable Overhead	$ 5.00	$ 5.00
Fixed Overhead	$ 5.00	$ 5.00

Net Profit	$ 4.00	$ 3.60

Hence it shall be better to sell the product without further processing.

Answer 12

Ch. 16 - Prob. 16.1ME Ch. 16 - Prob. 16.2ME Ch. 16 - Mini-Exercise 16.3 LO 2. 3 The make or buy...Ch. 16 - Prob. 16.4ME Ch. 16 - Mini-Exercise 16.5 LO 7 Net present ratio and IRR...Ch. 16 - Mini-Exercise 16.6 LO 9. 10 Payback period and...Ch. 16 - Exercise 16.7 LO 1 Application of cost terminology...Ch. 16 - Prob. 16.8E Ch. 16 - Exercise 16.9 LO 2, 3 Sell or process further?...Ch. 16 - Exercise 16.10 LO 2. 3 Sell or process further?...

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Answer to Problem 16.1ME

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