Sell or Process Further Great Lakes Boat Company manufactures sailboat hulls at

Question

Sell or Process Further Great Lakes Boat Company manufactures sailboat hulls at a cost of $4,200 per unit. The hulls are sold to boat yards for $4,800. The company is evaluating the desirability of adding masts, sails, and rigging to the hulls prior to sale at an additional cost of $2,600. The completed sailboats could then be sold for $6,900 each. Calculate the net benefit (cost) of processing the boat hulls into sail boats. Assume sales volume will not be affected. Use a negative sign with your answer, if appropriate.

Explanation / Answer

Net Benefit of producing the hull boats is -500

Particulars Hulls Sail Boats Increment Sales Revenue 4800 6900 2100 Manufacturing cost 4200 6800 2600 Net Profit 600 100 -500

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