A company. processes four different products that can either be sold as is or processed further.Listed below are sales and additional cost data: ProductSales Valuewith no furtherProcessingAdditionalProcessingCostsSalesValue afterfurtherprocessingPremier$1,350$1,400 $2,600Deluxe450225 850Super900450 1,800Basic 90 45 180 Which product(s) should not be processed further?Group of answer choicesPremier.Deluxe.Super.Basic.Premier and Basic.
Question
A company. processes four different products that can either be sold as is or processed further.Listed below are sales and additional cost data: ProductSales Valuewith no furtherProcessingAdditionalProcessingCostsSalesValue afterfurtherprocessingPremier1,400 $2,600Deluxe450225 850Super900450 1,800Basic 90 45 180 Which product(s) should not be processed further?Group of answer choicesPremier.Deluxe.Super.Basic.Premier and Basic.
Solution
To determine which product(s) should not be processed further, we need to compare the sales value after further processing with the sum of the sales value with no further processing and the additional processing costs. If the sales value after further processing is less than the sum of the sales value with no further processing and the additional processing costs, then the product should not be processed further.
Let's calculate for each product:
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Premier: Sales value after further processing = 1,350 + 2,750 Since 2,750, Premier should not be processed further.
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Deluxe: Sales value after further processing = 450 + 675 Since 675, Deluxe should be processed further.
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Super: Sales value after further processing = 900 + 1,350 Since 1,350, Super should be processed further.
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Basic: Sales value after further processing = 90 + 135 Since 135, Basic should be processed further.
Therefore, only Premier should not be processed further.
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