Question

In: Accounting

Oficina Bonita Company manufactures office furniture. An unfinished desk is produced for $34.30 and sold for...

Oficina Bonita Company manufactures office furniture. An unfinished desk is produced for $34.30 and sold for $64.30. A finished desk can be sold for $74.00. The additional processing cost to complete the finished desk is $6.00.

Prepare a differential analysis. Round your answers to two decimal places.

Differential Analysis
Sell Unfinished (Alternative 1) or Process Further into Finished (Alternative 2) Desks
Sell Unfinished
Desks
(Alternative 1)		 Process Further into
Finished Desks
(Alternative 2)		 Differential
Effects
(Alternative 2)
Revenues per desk $ $ $
Costs per desk
Profit (loss) per desk $ $ $

Should the company sell unfinished desks or process further and sell finished desks?
Oficina Bonita Company should .

Solutions

Expert Solution

Answer:

Oficina Bonita Company SHOULD process further.

Calculations:

Sell Unfinished desks Process Further Differential effects
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues per desk $                        64.30 $              74.00 $                     9.70
Costs per desk $                        34.30 $              40.30 $                     6.00
Profit/loss per desk $                        30.00 $              33.70 $                     3.70

In case of any doubt, please feel free to comment.

ekkarill92 answered 2 years ago
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