EXERCISE 7-11. Additional Processing Decision CellCom Inc. has decided to discontinue manufacturing its Elite model cellular phone. Currently, the company has a number of partially completed phones on hand. The company has spent $95 per unit to manufacture these phones. To complete each unit, costs of $10 for material and $10 for direct labor will be incurred. In addition, $5 of variable overhead and $20 of allocated fixed overhead (relating primarily to depreciation of plant and equipment) will be added per unit.

If CellCom Inc. completes the phones, they can sell them for $110 per unit. On the other hand, another manufacturer is interested in purchasing the partially completed phones for $90 per unit and converting them into wireless inventory tracking devices.

Determine if CellCom Inc. should complete the cellular phones or sell them in their current state.