?isReg. true&returnUrl;=https%3A%2F%2fco Homework Exercise 12-13 Sell or Process

Question

?isReg. true&returnUrl;=https%3A%2F%2fco Homework Exercise 12-13 Sell or Process Further Decision[L012-7 Wexpro, Inc..produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $54,000 per ton, one-fourth of which is allocated to product X15. Six thousand three hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $17 each, or processed further at a total cost of $8,700 and then sold for $20 each. Required 1. What is the financial advantage (disadvantage) of further processing product X15? 2. Should product X15 be processed further or sold at the split-off point? 2. Product X15 should be

Explanation / Answer

1 calculation of the financial advantage units of X15 manufactured 6300 cost per ton 54000 sale price at split off 17 sale value ( 6300 * 17 ) 107100 profit at split off sale ( 107100 - 54000 ) 53100 sale value after further processing units of X15 manufactured 6300 sale price at split off 20 sale value ( 6300 * 17 ) 126000 cost at split off 54000 further processing cost 8700 total cost ( 54000 + 8700 ) 62700 profit after further processing ( 126000 - 62700 ) 63300 financial advantage of further processing is the profit increased by 10200 ( 63300 - 53100 ) after further processing 2 product X15 should be further processed

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