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Sell at split off or process further

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Jerrings Company has already manufactured 28,000 units of Products A at a cost of $28 per unit. The 28,000 units can be sold at this stage for $700,000. Alternatively, it can be further processed at a $420,000 total additional cost and be converted into 5,600 units of Product B and 11,200 units of Product C.
Per unit selling price for Product B is $105 and for Product C is $70. Explain and show an analysis of whether the 28,000 units of Product A should be processed further or sold at split-off.

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Solution Summary

The solution explains how to decide whether to sell at the split off point or process further

Solution Preview

To make the decision we need to calculate the incremental revenues and the incremental cost
Current Revenue ...

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