Answer:
It should sell Product A as it is.
the impact of procees further is a loss for 16,000
Explanation:
We will check if the further process is a viable option for hte company's cost structure
additional revenue
(14 - 8) x 24,000 = 144,000
additonal cost (160,000)
differential (16,000)
We can sale the poudns at 8 or process further to receive 14
the differential revenue is 14 - 8 = 6 per pound
then we multiply this by the amount of pounds we produce.
This give us an additional revenue for 144,000
Our additional cost ofr this process are 160,000
The cost are greater than the proceeds, it is not viable. It should sell Product A as it is.
Further process generates a loss for 16,000
