Answer:
It is more convenient to continue processing.
Explanation:
Giving the following information:
Cobe Company has already manufactured 17,000 units of Product A for $25 per unit. The 17,000 units can be sold at this stage for $450,000. Alternatively, the units can be further processed at a $280,000 total additional cost and be converted into 5,800 units of Product B and 11,100 units of Product C. Per unit selling price for Product B is $100 and for Product C is $56.
We need to determine whether it is more convenient to sell the units now, or continue processing.
Sell now:
Income= 450,000 - (17,000*25)= $25,000
Continue processing:
Income= sales produc B + sales product C - joint cost - Product A cost
Income= 5,800*100 + 11,100*56 - 280,000 - (17,000*25)= $496,600
It is more convenient to continue processing.
