Sell or Process Further

$$2$ per unit and variable overhead will go up by $$1$ per unit. Fixed costs will increase from the current level of $$160,000$ to $$225,000.$

Prepare an analysis showing whether Jensen should process the assemblies further.

Use a negative sign with answer to only indicate a loss from processing assemblies further; otherwise do not use negative signs with your answers.Sell or Process Further

Jensen Manufacturing Company makes a partially completed assembly unit that it sells for $$44$ per unit. Normally, $38,000$ units are sold each year. Variable unit cost data on the assembly are as follows:

Direct material $$10$

Direct labor $8$

Variable manufacturing overhead $4$

The company is now using only $70\%$ of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for $$51$ per unit. If the company does this, material and labor costs will each increase by $$2$ per unit and variable overhead will go up by $$1$ per unit. Fixed costs will increase from the current level of $$160,000$ to $$225,000.$

Prepare an analysis showing whether Jensen should process the assemblies further.

Use a negative sign with answer to only indicate a loss from processing assemblies further; otherwise do not use negative signs with your answers.

Sell of Process Further Differential Analysis

Differential revenue Answer

$0$

Differential costs

Direct material Answer

$0$

Direct labor Answer

$0$

Variable overhead Answer

$0$

Fixed costs Answer

$0$

Additional income $($loss$)$ from processing further Answer

$0$