115.The decision rule on whether to sell or process furthera.varies from situation to situation.b.is process further as long as total revenue exceeds present revenues.c.is process further if incremental revenue from such processing exceeds incremental fixed costs.d.is process further if incremental revenue from such processing exceeds the incremental processing costs.Ans: D, SO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Cost Management116.Eddy Company is starting business and is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $80 and Eddy Company would sell it for $180. The cost to assemble the product is estimated at $36 per unit and Eddy Company believes the market would support a price of $232 on the assembled unit. What is the correct decision using the sell or process further decision rule?117.Mallory Company manufactures widgets. Bowden Company has approached Mallory with a proposal to sell the company widgets at a price of $80,000 for 100,000 units. Mallory is currently making these components in its own factory. The following costs are associated with this part of the process when 100,000 units are produced:Direct material$ 31,000Direct labor29,000Manufacturing overhead40,000Total$100,000The manufacturing overhead consists of $16,000 of costs that will be eliminated if the components are no longer produced by Mallory. From Mallory's point of view, how much is the incremental cost or savings if the widgets are bought instead of made?7 - 26
118.The focus of a sell or process further decision is
You've reached the end of your free preview.
Want to read all 65 pages?
- Fall '12
- AICPA FN, AICPA BB, AICPA PC