Process or Sell Product T is produced for $3.38 per pound. Product T can be sold

Question

Process or Sell Product T is produced for $3.38 per pound. Product T can be sold without additional processing for $4.12 per pound, or processed further into Product U at an additional cost of $0.45 per pound. Product U can be sold for $4.32 per pound. Prepare a differential analysis dated September 17, on whether to sell T (Alternative 1) or process further into U (Alternative 2). If required, round your answers to the nearest whole dollar. Differential Analysis Sell Product T (Alt. 1) or Process Further into Product U (Alt. 2) September 17 Sell Product T (Alternative 1) Process Further into Product U (Alternative 2) Differential Effect on Income (Alternative 2) Revenues, per pound Costs, per pound Should Product T be sold (Alternative 1) or processed further into Product U (Alternative 2)?

Explanation / Answer

Sell Product T Process further into Product U Differential effect on income Revenues per pound 4.12 4.32 0.2 Costs per pound -3.38 -3.83 -0.45 Income(loss) per pound 0.74 0.49 -0.25 Product T should be sold

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