A company has already incurred a $55,000 cost in partially producing its three p

Question

A company has already incurred a $55,000 cost in partially producing its three products. Their selling prices when partially and fully processed are shown in the following table with the additional costs necessary to finish their processing. Based on this information, should any products be processed further? Product Unfinished Selling Price Finished Selling Price Further Processing Costs A $72 $108 $35 B 83 124 42 C 94 141 45

A. All of these products should be processed further.

B. None of these products should be processed further.

C. Products A and B should be processed further.

D. Products B and C should be processed further.

E. Products A and C should be processed further.

Explanation / Answer

Answer: E. Products A and C should be processed further.

Product A: ($108 - $72) - $35= $1

Product B: ($124 - $83) - $42 = ($1)

Product C: ($141 - $94) - $45 = $2

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