Answer:
Income (loss) $490,000 $928,000
Net incremental income= $438,000
17,000 units of product A should be processed further.
Explanation:
Preparation of analysis that shows whether 17,000 units of Product A should be processed further or not.
Sell Process further
Sales $490,000 $1,228,000
Relevant costs
Additional cost to process further $300,000
Total relevant costs $300,000
Income (loss) $490,000 $928,000
Calculation for sales after processing further
Sales after processing further = (5,400 x $104) + (11,900 x $56)
Sales after processing further= $561,600 + $666,400
Sales after processing further= $1,228,000
Calculation for Net incremental income
Net incremental income = $928,000 - $490,000
Net incremental income= $438,000
Therefore 17,000 units of product A should be processed further.
