A company has already incurred $5,600 of costs in producing 6,050 units of Product XY. Product XY can be sold as is for $27 per unit. Instead, the company could incur further processing costs of $11 per unit and sell the resulting product for $31 per unit. Should the company sell Product XY as is or process it further? (Any loss amount should be indicated with minus sign.)

Question

Business

Haylee

25 October, 17:06

A company has already incurred $5,600 of costs in producing 6,050 units of Product XY. Product XY can be sold as is for $27 per unit. Instead, the company could incur further processing costs of $11 per unit and sell the resulting product for $31 per unit. Should the company sell Product XY as is or process it further? (Any loss amount should be indicated with minus sign.)

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Answers (1)

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Winston Osborn · Answer 1

The company should sell product XY

Explanation:

The computation of given question is shown below:-

Particulars Sell as is Process Further Incremental Amount

Selling Price

Per unit $27 $31 - $4

Additional processing

Cost per unit $11 $11

Total $27 $20 - $7

Therefore, as we can see that the negative amount came so we sell and if we proceed the company will go to the loss.