Purchase Solution

Sell or Process Decision at Zeppe Inc.

Not what you're looking for?

Ask Custom Question

Zeppe Inc. purchased potatoes from farmers. The potatoes are then peeled, producing two intermediate products- peeled and depeeled spuds. The peels can then be processed further to make a cocktail of organic nurtrients. And the depeeled spuds can be processed further to make frozen french fries. A batch of potatoes cost $63 to buy them from farmers and $12 to peel in the company's plant. The peels produced from a batch can be sold as is for animal feed for $29 or processed further for $15 to make the cocktail of nutrients that are sold for $41. The depeeled spuds can be sold as is for $40 or processed further for $22 to make frozen french fries that are sold for $77.

Assuming that no other costs are involved in processing potatoes or in selling products, how much money does the company make from processing one batch of potatoes into the cocktail of organic nutrients and frozen french fries. Work must be shown.

Do an analysis of sell or process further. Should each of the immediate products, peels and depeeled spuds, be sold as is or processed further into an end product? Explain.

Purchase this Solution
Solution Summary

The solution explains how to evaluate the decison to sell now or process further with calculations and answers.

Solution Preview

1. For analyzing the profitability of the overall operation, following profit loss statement is prepared:
Combined final sales value=Sale value of cocktail of nutrients+Sale value of frech fries=$41+$77=$118
Less: Costs of producing the end products:
Cost of potatoes=$63
Cost of ...

Purchase this Solution
Free BrainMass Quizzes
Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

View More Free Quizzes
Related BrainMass Solutions

  • Decision to Sell at Split-off or Process Further

    561204 Net Realizable Value Method, Decision to Sell at Split-off or Process Further Net Realizable Value Method, Decision to Sell at Split-off or Process Further Pacheco, Inc., produces two products, overs and unders, in a single process.

  • Relevent costing

    Decision on Segment disposition Decision on slae or process after a common process Identification of relevent costs

  • Transfer Pricing

    Cole Division will further process these components at a variable cost of $500 per unit. ?

  • This post addresses cost accounting study guide questions.

    incremental revenues are $2 per unit 20) Walton, Inc. is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $16, while the cost of assembling each unit is estimated at $17.

  • Decision Making

    222014 Decision Making You recently observed a meeting between Ron, (a production manager at your company) and a sales representative from "Big Machines Inc". Big Machines Inc last year sold your company a major piece of production equipment.

  • International Business for Forms

    For this strategy, Forms Inc must have a vertical structure and centralized decision making.

  • Moore Inc., target profit , The dollar value of Morey's...

    Managerial Accounting problems Moore Inc. invented a secret process to double the growth rate of hatchery trout and manufactures a variety of products related to this process.

  • Donkey Bikes - Incremental Analysis

    Additional variable overhead will be incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the bikes. a) Prepare an incremental analysis for the sell-or-process-further decision.

  • Martha Stewart Case

    What value system was used in making the final decision? What were the kinds of major decision traps leading to the blunder? What steps in the decision making process were overlooked or insufficiently carried out?

View More Related Solutions