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Olegator [25]
3 years ago
14

Holmes Company produces a product that can either be sold as is or processed further. Holmes has already spent $50,000 to produc

e 1,250 units that can be sold now for $67,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $250 per unit. If Holmes processes further, the units can be sold for $375 each. Compute the incremental income if Holmes processes further.
Business
1 answer:
Xelga [282]3 years ago
6 0

Answer:

It is more profitable to continue processing.

Explanation:

Giving the following information:

The number of units= 1,250

It can be sold now for $67,500 to another manufacturer.

Alternatively, Holmes can process the units further at an incremental cost of $250 per unit. If Holmes processes further, the units can be sold for $375 each.

<u>The $50,000 is a sunk cost, meaning that it has already happened. It shouldn't be taken into account.</u>

Sell as it is:

Income= $67,500

Continue production:

Income= 1,250*(375 - 250)= $156,250

It is more profitable to continue processing.

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Answer:

Explanation:

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3 0
3 years ago
Read 2 more answers
Jacobi Supply Company recently ran into certain financial difficulties that have resulted in the initiation of voluntary settlem
Mashcka [7]

Answer: Composition

Explanation:

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The cash payment required of the company would therefore be:

= Amount of debt in $ - Amount to be paid per dollar.

= 150,000 * 0.5

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A composition refers to an agreement between a debt and its creditors that would allow it to pay off part of its debt in lieu of the total value. This is usually done when the debt risks being insolvent or bankrupt but can still pay off part of its debt.

The agreement would enable it pay off some of the debt and the entire debt would be written off. The benefit to the debtor is that they avoid bankruptcy and the benefit to the creditor is that they get more than they would have gotten had bankruptcy been declared.

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5 0
2 years ago
The table shows the predicted cost of attending an in-state four-year public college 4 years from now. Category Predicted Annual
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7 0
3 years ago
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Franklin Electric is presently generating earnings available to common shareholders of​ $7.25 per share. The​ firm's income tax
Sphinxa [80]

Answer:

$1.45

Explanation:

First of all we need to know what is earnings available to common shareholders (EACS).

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