Question

Oficina Bonita Company manufactures office furniture. An unfinished desk is produced for $37.50 and sold for $64.25. A finished desk can be sold for $75.00. 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  .

Answer 1

		Sell Unfinished	Process Further into	Differential
		Desks	Finished Desks	Effects
		(Alternative 1)	(Alternative 2)	(Alternative 2)
	Revenues per desk	64.25	75.00	10.75
	Less :Costs per desk	37.50	43.50	6.00
	Profit (loss) per desk	26.75	31.50	4.75
	Oficina Bonita Company should Process further & Sell finished desks, as profit after further processing is more than profit by selling unfinished desks.