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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Solve

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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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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