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You can read the details below. By accepting, you agree to the updated privacy policy. Thank you! View updated privacy policy We've encountered a problem, please try again. 115.The decision rule on whether to sell or process furthera.varies from situation to situation.b.is process further as long as total revenue exceeds present revenues.c.is process further if incremental revenue from such processing exceedsincremental fixed costs.d.is process further if incremental revenue from such processing exceedsthe incremental processing costs. 116.Eddy Company is starting business and is unsure of whether to sell itsproduct assembled or unassembled. The unit cost of the unassembledproduct is €60 and Eddy Company would sell it for €135. The cost toassemble the product is estimated at €27 per unit and Eddy Companybelieves the market would support a price of €174 on the assembled unit.What is the correct decision using the sell or process further decision rule? Get answer to your question and much more 117.Mallory Company manufactures widgets. Bowden Company has approachedMallory with a proposal to sell the company widgets at a price of £82,000 for100,000 units. Mallory is currently making these components in its ownfactory. The following costs are associated with this part of the process when100,000 units are produced:Direct material£31,000Direct labor29,000Manufacturing overhead40,000Total£100,000The manufacturing overhead includes £16,000 of costs that will be eliminatedif the components are no longer produced by Mallory. From Mallory’s point ofview, how much is the incremental cost or savings if the widgets are boughtinstead of made? Get answer to your question and much more What is the Sell or Process Further Decision?The sell or process further decision is the choice of selling a product now or processing it further to earn additional revenue. This choice is based on an incremental analysis of whether the additional revenues to be gained will exceed the additional costs to be incurred as part of the additional processing work. For example, if a green widget can be converted into a red widget at an incremental cost of $1.00 per unit, then processing further is a good idea as long as the incremental price gain to be achieved is at least $1.01 per unit. The sell or process further decision most commonly arises when two or more products are generated by a manufacturing process. At the point when the products can be split apart (the split-off point), there is a choice to sell the goods immediately or attempt to capture additional value by engaging in more processing. This decision may vary over time, based on changes in the market prices of a product at each stage of processing. If the market price declines for a later-stage product, it can make more sense to sell it without additional processing. Conversely, if the market price increases for a later-stage product, the better choice may be to continue with additional processing in order to reap higher profits. Recommended textbook solutions
 Accounting: What the Numbers Mean9th EditionDaniel F Viele, David H Marshall, Wayne W McManus 345 solutions Essentials of Investments9th EditionAlan J. Marcus, Alex Kane, Zvi Bodie 689 solutions Accounting23rd EditionCarl S Warren, James M Reeve, Jonathan E. Duchac 2,210 solutions Bond Markets, Analysis, and Strategies9th EditionFrank J. Fabozzi 559 solutions What is the decision rule to sell or process further?The sell or process further decision is the choice of selling a product now or processing it further to earn additional revenue. This choice is based on an incremental analysis of whether the additional revenues to be gained will exceed the additional costs to be incurred as part of the additional processing work.
Which of the following is not considered in sell or process further decisionThe correct option is: c) Fixed costs
Fixed cost is considered a cost that cannot be processed for further decisions as it stays the same over a period of time.
Which of the following is irrelevant in sell or process further decision in case of joint product or byproducts?Fundamentals of the Decision to Sell or Process Further
Any costs incurred prior to the split-off point are irrelevant to the decision to process further as those are sunk costs; only future costs are relevant costs. Even though joint product costs are common costs, they are routinely allocated to the joint products.
What type of cost is irrelevant in a sell or process further decision?Irrelevant costs are those that will not change in the future when you make one decision versus another. Examples of irrelevant costs are sunk costs, committed costs, or overheads as these cannot be avoided. There is no correct answer for each business, it will often alter per situation.
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Which of the following is the decision rule of a sell-or-process-further decision?
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