FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Sell or Process Further
Jenson
Manufacturing Company makes a partially completed assembly unit that it sells for $40 per unit. Normally, 40,000 units are sold each year. Variable unit cost data on the assembly are as follows
Direct material
$10
Drect labor
Vantable manufacturing overhead
The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for 14% per unit. If the company does this, material and labor costs
will each increase by $2 per unit and variable overhead will go up by $1 per unt. Fixed costs will increase from the current level of $160,000 to $240,000
Prepare an analysis showing whether jensen should process the assembles fuether.
Use a negative sign with answer to only indicate a loss from precessing assemblies further; otherwise do not use negative signs with your answers.
Sell of Process Further Differential Analysis
Different revenue
Differential costs
Dramatend
Directa
Variable overhead
Fixed costs
Anal income toss) from prosing further
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Transcribed Image Text:Sell or Process Further Jenson Manufacturing Company makes a partially completed assembly unit that it sells for $40 per unit. Normally, 40,000 units are sold each year. Variable unit cost data on the assembly are as follows Direct material $10 Drect labor Vantable manufacturing overhead The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for 14% per unit. If the company does this, material and labor costs will each increase by $2 per unit and variable overhead will go up by $1 per unt. Fixed costs will increase from the current level of $160,000 to $240,000 Prepare an analysis showing whether jensen should process the assembles fuether. Use a negative sign with answer to only indicate a loss from precessing assemblies further; otherwise do not use negative signs with your answers. Sell of Process Further Differential Analysis Different revenue Differential costs Dramatend Directa Variable overhead Fixed costs Anal income toss) from prosing further
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