QUESTION 1 Not yet answered Points out of 1.00 Flag question Sell or Process Fur

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QUESTION 1 Not yet answered Points out of 1.00 Flag 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 $1,500. The completed sailboats could then be sold for $6,200 each. Determine whether the company should sell sailboat hulls or process them further into complete sailboats. Assume sales volume will not be affected. Calculate the net advantage (disadvantage) of processing the boat hulls into sail boats. Use a negative sign with your answer, if appropriate

Explanation / Answer

Company should sell sailboat hulls as further processing would result in decrease in income by $100 per sailboat Statement showing computations Particulars Product A Selling price after further processing                        6,200.00 Selling price at split off point                        4,800.00 Incremental revenue per sailboat                        1,400.00 Total Incremental Processing costs per sail boat                        1,500.00 Total Incremental profit or loss per sailboat                         (100.00) Sold at split off

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