Hazel Company makes an unassembled product that it currently sells for $55. Production costs are $20. Hazel is considering assembling the product and selling it for $68. The cost to assemble the product is estimated at $12. What decision should Hazel make? A) Sell before assembly; net income per unit will be $12 greater. B) Sell before assembly; net income per unit will be $1 greater. C) Process further; net income per unit will be $13 greater. D) Process further; net income per unit will be $1 greater. 24 E) none of the above

Hazel Company makes an unassembled product that it currently sells for $55. Production costs are $20. Hazel is considering assembling the product and selling it for $68. The cost to assemble the product is estimated at $12. What decision should Hazel make? A) Sell before assembly; net income per unit will be $12 greater. B) Sell before assembly; net income per unit will be $1 greater. C) Process further; net income per unit will be $13 greater. D) Process further; net income per unit will be $1 greater. 24 E) none of the above

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6EA: Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in...

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Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided, If Reuben accepts the offer, what will the effect on profit be?
Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the production of the boxed lunches. The costs to make the cookies are: A potential supplier has offered to sell Country Diner the cookies for $0.85 each. If the cookies are purchased, 10% of the fixed overhead could be avoided. If Jason accepts the offer, what will the effect on profit be?
Sheffield, Inc. is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $14. while the cost of assembling each unit is estimated at $16. Unassembled units can be sold for $54, while assembled units could be sold for $65 per unit. What decision should Sheffield make? O Process further; the company will save $11 per unit. O Process further; the company will save $5 per unit. Sell before assembly; the company will save $9 per unit. O Sell before assembly; the company will save $5 per unit.
Concord, Inc. is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $13, while the cost of assembling each unit is estimated at $15. Unassembled units can be sold for $54, while assembled units could be sold for $60 per unit. What decision should Concord make? O Sell before assembly; the company will save $9 per unit. Process further; the company will save $9 per unit. O Process further; the company will save $6 per unit. O Sell before assembly; the company will save $4 per unit.
Cobe Company has manufactured 225 partially finished cabinets at a cost of $56,250. These can be sold as is for $67,500. Instead, the cabinets can be stained and fitted with hardware to make finished cabinets. Further processing costs would be $13,500, and the finished cabinets could be sold for $90,000.(a) Prepare a sell as is or process further analysis of income effects.(b) Should the cabinets be sold as is or processed further and then sold?
Cobe Company has manufactured 240 partially finished cabinets at a cost of $60,000. These can be sold as is for $72,000. Instead, the cabinets can be stained and fitted with hardware to make finished cabinets. Further processing costs would be $14,400, and the finished cabinets could be sold for $96,000. (a) Prepare a sell as is or process further analysis of income effects. (b) Should the cabinets be sold as is or processed further and then sold? (a) Sell or Process Analysis Revenue Costs Income Incremental income (loss) to process further (b) The company should: Sell As Is Process Further
Zang Co. has the option to either further process product Alpha to produce Product Zeta. The selling price of product Alpha is $36 per unit and it costs $23 to produce each unit of product Alpha. Product Zeta would be sold for $55 and would require an additional $25 cost for production. What is the differential cost to produce product Zeta? a. $25 per unit b. $20 per unit c. $23 per unit d. $2 per unit
Sheffield Corp. is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $27 and Sheffield would sell it for $62. The cost to assemble the product is estimated at $19 per unit and the company believes the market would support a price of $66 on the assembled unit. What decision should Sheffield make and why? O Process further because the company will be better off by $16 per unit. O Sell before assembly because the company will be better off by $15 per unit. O Sell before assembly because the company will be better off by $4 per unit. O Process further because the company will be better off by $12 per unit.
Vaughn Manufacturing is starting business and is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $65 and Vaughn Manufacturing would sell it for $145. The cost to assemble the product is estimated at $28 per unit and Vaughn Manufacturing believes the market would support a price of $178 on the assembled unit. What is the correct decision using the sell or process further decision rule and why? Process further because profits will be greater by $33 per unit. Sell before assembly because profits will be greater by $33 per unit. Sell before assembly because profits will be greater by $28 per unit. O Process further because profits will be greater by $5 per unit. eTextbook and Media Save for Later Attempts: 2 of 3 used Submit Answer
Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20 per pound and costs $15.75 per pound to produce. Product D would sell for $38 per pound and would require an additional cost of $8.55 per pound to produce. What is the differential revenue of producing Product D?
Cobe Company has manufactured 200 partially finished cabinets at a cost of $50,000, These can be sold as is for $60,000. Instead, the cabinets can be stained and fitted with hardware to make finished cablnets. Further processing costs would be $12.000, and the finished cabinets could be sold for $80,000. (a) Prepare a sell as is or process further analysis of income effects. (b) Should the cabinets be sold as is or processed further and then sold? 8 Answer is complete but not entirely correct. (a) Sell or Process Analysis Process Further Sell As is Revenue 60,000 Os 30.000 Costs 02000 12.000 Income 10.000 Os 18.000 Incrementa Income (loss) to process further 8.000 (b) The company should Process further
Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20 per pound and costs $15.75 per pound to produce. Product D would sell for $38 per pound and would require an additional cost of $8.55 per pound to produce. How do we calculate the differential cost of producing Product D?