Question

An unfinished desk is produced for $36.00 and sold for $65.00. A finished desk can be sold for $75.00. The additional processing cost to complete the finished desk is $5.95. Provide a differential analysis for further processing. Round your answers to two decimal places, if necessary.
Differential revenue from further processing:
Revenue per unfinished desk
Revenue per finished desk
Differential revenue
Differential cost per desk:
Additional cost for producing
Differential income from further processingvv

Answer 1

Answer:

Differential income from further processing   $ 4.05

Explanation:

A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.  

Also note that all cost incurred up to the point of crush are irrelevant to the decision to process further  

Revenue from unfinished desk =                                                $65.00

Revenue from finished desks                                                     75.00

Additional revenue from further process                                      10

Further processing cost                                                                   5.95

Differential income from further processing                             4.05