Principles of Financial Accounting (Elon University)
11th Edition
ISBN: 9781308839233
Author: Marshall
Publisher: McGraw-Hill Education
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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 | $ 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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Chapter 16 Solutions
Principles of Financial Accounting (Elon University)
Ch. 16 - Prob. 16.1MECh. 16 - Prob. 16.2MECh. 16 - Mini-Exercise 16.3 LO 2. 3 The make or buy...Ch. 16 - Prob. 16.4MECh. 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. 16.8ECh. 16 - Exercise 16.9 LO 2, 3 Sell or process further?...Ch. 16 - Exercise 16.10 LO 2. 3 Sell or process further?...
Ch. 16 - Exercise 16.11
LO 2 , 3
Accept special sales...Ch. 16 - Exercise 16.12
LO 2, 3
Accept special sales order?...Ch. 16 - Prob. 16.13ECh. 16 - Exercise 16.14
LO 2, 3
Target costing Rainbow...Ch. 16 - Exercise 16.15
LO 2. 3
The make or buy decision...Ch. 16 - Exercise 16.16
LO 2, 3
The make or buy decision...Ch. 16 - Prob. 16.17ECh. 16 - Prob. 16.18ECh. 16 - Prob. 16.19ECh. 16 - Prob. 16.20ECh. 16 - Prob. 16.21ECh. 16 - Prob. 16.22ECh. 16 - Prob. 16.23ECh. 16 - Prob. 16.24ECh. 16 - Prob. 16.25ECh. 16 - Prob. 16.26ECh. 16 - Prob. 16.27PCh. 16 - Problem 16.28 LO 2, 3 Relevant costs, special...Ch. 16 - Problem 16.29 LO 2, 3 Continue or discontinue a...Ch. 16 - Prob. 16.30PCh. 16 - Prob. 16.31PCh. 16 - Prob. 16.32PCh. 16 - Prob. 16.33PCh. 16 - Prob. 16.34PCh. 16 - Prob. 16.35PCh. 16 - Prob. 16.36PCh. 16 - Prob. 16.38CCh. 16 - Capital budget expenditure analysis: Internet...
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