Magnolia Company produces a product that can either be sold as is or processed f

Question

Magnolia Company produces a product that can either be sold as is or processed further. Magnolia has already spent $86,000 to produce 1,850 units that can be sold now for $79,500 to another manufacturer Alternatively, Magnolia can process the units further at an incremental cost of $260 per unit. If Magnolia processes further, the units can be sold for $395 each. Compute the incremental income if Magnolia processes further. If a cell does not require an answer, leave it blank. Process Further Incremental Amount Sell as is Sales Additional processing costs Income (loss) The company should:

Explanation / Answer

Incremental analysis :

Sell as is Process further Incremental amount Sales 79500 730750 651250 Additional processing costs 0 -481000 -481000 Income (loss) 79500 249750 170250 The company should Sale after process further

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