Process or Sell Product J19 is produced for $11 per gallon. Product J19 can be s
ID: 2575299 • Letter: P
Question
Process or Sell
Product J19 is produced for $11 per gallon. Product J19 can be sold without additional processing for $18 per gallon, or processed further into Product R33 at an additional cost of $7 per gallon. Product R33 can be sold for $24 per gallon.
a. Prepare a differential analysis dated April 30 on whether to sell Product J19 (Alternative 1) or process further into Product R33 (Alternative 2).
Differential Analysis Sell Product J19 (Alt. 1) or Process Further into Product R33 (Alt. 2) April 30 Sell Product J19 (Alternative 1) Process Further into Product R33 (Alternative 2) Differential Effect on Income (Alternative 2) Revenues, per unit $ $ $ Costs, per unit Income (loss), per unit $ $ $Explanation / Answer
Differential analysis Sell product J19 Process further into product R33 Differential effect on income Alternative:1 Alternative:2 Revenues per unit 18 24 6 Costs per unit 11 18 7 (11+7) Income (loss) per unit 7 6 -1 It is advisable not to process further since it will result in decrease in income by $1 per unit
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