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 table below with the additional costs necessary to finish their processing. Based on this information, should any products be processed further?
$$\begin{array} { | c | c | c | c | }
\hline \text { Product } & \begin{array} { c }
\text { Unfinished } \
\text { Selling Price }
\end{array} & \begin{array} { c }
\text { Finished } \
\text { Selling Price }
\end{array} & \begin{array} { c }
\text { Further } \
\text { Processing } \
\text { Costs }
\end{array} \
\hline \text { A } & \$ 900 & \$ 1,000 & \$ 65 \
\hline \text { B } & \$ 600 & \$ 675 & \$ 76 \
\hline
\end{array}$$

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 table below with the additional costs necessary to finish their processing. Based on this information, should any products be processed further?
$$\begin{array} { | c | c | c | c | } 
\hline \text { Product } & \begin{array} { c } 
\text { Unfinished } \
\text { Selling Price }
\end{array} & \begin{array} { c } 
\text { Finished } \
\text { Selling Price }
\end{array} & \begin{array} { c } 
\text { Further } \
\text { Processing } \
\text { Costs }
\end{array} \
\hline \text { A } & \$ 900 & \$ 1,000 & \$ 65 \
\hline \text { B } & \$ 600 & \$ 675 & \$ 76 \
\hline
\end{array}$$

Quizplus · Accepted Answer

Product A should be processed further because the increase in selling price ($1,000 - $900 = $100) is greater than the further processing cost ($65). Product B should not be processed further because the increase in selling price ($675 - $600 = $75) is less than the further processing cost ($76).

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