A company has already incurred a $24,000 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, should any products be processed further? $$\begin{array} { | c | c | c | c | }
\hline \text { Product } & \begin{array} { c }
\text { Unfinished } \
\text { Selling Price }
\end{array} & \begin{array} { c }
\text { Finished } \
\text { Selling Price }
\end{array} & \begin{array} { c }
\text { Further } \
\text { Processing } \
\text { Costs }
\end{array} \
\hline \text { A } & \$ 900 & \$ 1,000 & \$ 65 \
\hline \text { B } & 600 & 675 & 76 \
\hline
\end{array}$$
A)Both product A and product B should be processed further.
B)Neither product A nor product B should be processed further.
C)Only product B should be processed further.
D)Only product A should be processed further.
E)A processing further decision cannot be made from the available data.

Question

A company has already incurred a $24,000 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, should any products be processed further? $$\begin{array} { | c | c | c | c | } 
\hline \text { Product } & \begin{array} { c } 
\text { Unfinished } \
\text { Selling Price }
\end{array} & \begin{array} { c } 
\text { Finished } \
\text { Selling Price }
\end{array} & \begin{array} { c } 
\text { Further } \
\text { Processing } \
\text { Costs }
\end{array} \
\hline \text { A } & \$ 900 & \$ 1,000 & \$ 65 \
\hline \text { B } & 600 & 675 & 76 \
\hline
\end{array}$$
A)Both product A and product B should be processed further.
B)Neither product A nor product B should be processed further.
C)Only product B should be processed further.
D)Only product A should be processed further.
E)A processing further decision cannot be made from the available data.

Quizplus · Accepted Answer

Product A should be processed further because the additional revenue from selling the finished product ($1,000) exceeds the additional cost of processing ($65). Product B should not be processed further because the additional revenue from selling the finished product ($675) is less than the additional cost of processing ($76).

A Company Has Already Incurred a $24,000 Cost in Partially