A company has already incurred a $600 cost in partially producing its two products.Their selling prices when partially and fully processed are shown in the following table with the additional costs necessary to finish their processing.Based on this information, the company should process both products further.
$$\begin{array} { | c | c | c | c | }
\hline \text { Product } & \begin{array} { c }
\text { Unfinished } \
\text { Selling Price }
\end{array} & \begin{array} { c }
\text { Finished } \
\text { Selling Price }
\end{array} & \begin{array} { c }
\text { Further } \
\text { Processing } \
\text { Costs }
\end{array} \
\hline \text { A } & \$ 425 & \$ 500 & \$ 70 \
\hline \text { B } & 375 & 400 & 20 \
\hline
\end{array}$$

Question

A company has already incurred a $600 cost in partially producing its two products.Their selling prices when partially and fully processed are shown in the following table with the additional costs necessary to finish their processing.Based on this information, the company should process both products further.
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Product } & \begin{array} { c } 
\text { Unfinished } \
\text { Selling Price }
\end{array} & \begin{array} { c } 
\text { Finished } \
\text { Selling Price }
\end{array} & \begin{array} { c } 
\text { Further } \
\text { Processing } \
\text { Costs }
\end{array} \
\hline \text { A } & \$ 425 & \$ 500 & \$ 70 \
\hline \text { B } & 375 & 400 & 20 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The total revenue from finishing both products would be:
(Product A Finished Selling Price - Product A Further Processing Cost) + (Product B Finished Selling Price - Product B Further Processing Cost) = 
($500 - $70) + ($400 - $20) = $810
Since the revenue from finishing both products exceeds the cost already incurred ($810 > $600), it is financially beneficial for the company to process both products further.

A Company Has Already Incurred a $600 Cost in Partially