Question

Walters manufactures a specialty food product that can currently be sold for $21.50 per unit and has 19,500 units on hand. Alternatively, it can be further processed at a cost of $11,500 and converted into 11,500 units of Deluxe and 5,500 units of Super. The selling price of Deluxe and Super are $31.50 and $19.50, respectively. The incremental net income of processing further would be:

Answer 1

the incremental net income of processing further is $38,750

Step-by-step explanation:

The computation of the incremental net income of processing further is given below:

= (11,500 units × $31.50 + 5,500 units × $19.50 - $11,500) - ($19,500 × $21.50)

= ($362,250 + $107,250 - $11,500) - $419,250

= $38,750

Hence, the incremental net income of processing further is $38,750