Process or Sell

Product A is produced for $3.52 per pound. Product A can be sold without additional processing for $4.11 per pound, or processed further into Product B at an additional cost of $0.42 per pound. Product B can be sold for $4.40 per pound.

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Prepare a differential analysis dated September 17, 2014, on whether to sell A (Alternative 1) or process further into B (Alternative 2). If required, round your answers to two decimal places.

Differential Analysis

Sell Product A (Alt. 1) or Process Further into Product B (Alt. 2)

September 17, 2014

Sell Product A (Alternative 1)

Process Further into Product B (Alternative 2)

Differential Effect on Income (Alternative 2)

Revenues, per pound

$

$

$

Costs, per pound

Income (Loss), per pound

$

$

$

Should Product A be sold (Alternative 1) or processed further into Product B (Alternative 2)? Select Sell Product A Process further into Product B Correct 1 of Item 2