Question

Walters manufactures a specialty food product that can currently be sold for $21.80 per unit and has 19,800 units on hand. Alternatively, it can be further processed at a cost of $11,800 and converted into 11,800 units of Deluxe and 5,800 units of Super. The selling price of Deluxe and Super are $31.20 and $19.80, respectively. The incremental income of processing further would be:

Answer 1

$51,360

Step-by-step explanation:

The computation of the incremental income of processing further is shown below:

Given that

Total sales unit before further processing is 19,800 units

And, its sale price per unit is $21.80

So, the total sales price is

= 19,800 units × $21.80

= $431,640

$483000

Now after processing, the sales revenue in both the deluxe and super is

= 11,800 units × $31.20 + 5,800 units × $19.80

= $368,160 + $114,840

= $483,000

So, the incremental net income after further processing is

= $483,000 - $431,640

= $51,360