Electronic Media has decided to discontinue manufacturing their personal tablets

Question

Electronic Media has decided to discontinue manufacturing their personal tablets. This decision results in tablets that are not completed. The company can sell the tablets as is for $107 per unit or they can complete the production and sell them for $130 per unit. The following cost data is available:

Should Electronic Media sell the units as is or continue processing them? Why? Show your work.

Costs incurred to date: Materials 27 Labor 31 Variable overhead 20 Fixed overhead 32 110 Additional Costs to complete (per unit) Materials 14 Labor 16 Variable overhead 10 40

Explanation / Answer

further processing will result an additional loss of $17 per unit

Before further proccess After further proccess Selling price $                                          107 $                                      130 Less: Costs $                                          110 $110+$40 = $150 Profit / (loss) $                                            (3) $                                      (20)

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