Answer:
It is advisable to process Z unit further.
Explanation:
Ans: C. Z.
Decision about further processing of Products
Particulars/ Products X Y Z
Selling Price after further processing $ 20 $ 40 $ 70
Less: Selling Price at split off $ 16 $ 26 $ 48
Incremental value $ 4 $ 14 $ 22
Less: Further Processing Cost $ 8 $ 20 $ 20
Profit / (loss) arising due to further processing (a) ($ 4) ($ 6) $ 2
Units (b) 12,000 8,000 7,000
Increase/ (Decrease) in Operational Income (a*b) ($ 48,000) ($ 48000) $ 14,000
It is advisable to process Z unit further.
