Tram Manufacturing is starting business and is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $160 and Tram would sell it for $360. The cost to assemble the product is estimated at $72 per unit and Tram believes the market would support a price of $464 on the assembled unit. What is the correct decision using the sell or process further decision rule? a.Sell before assembly, the company will be better off by $104 per unit.
Process further, the company will be better off by $104 per unit. c.Process further, the company will be better off by $32 per unit. d.Sell before assembly, the company will be better off by $72 per unit. 2.Mink Manufacturing is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $60 and Mink would sell it for $130. The cost to assemble the product is estimated at $42 per unit and the company believes the market would support a price of $170 on the assembled unit.
What decision should Mink make? a.Sell before assembly, the company will be better off by $2 per unit. b.Process further, the company will be better off by $28 per unit. c.Sell before assembly, the company will be better off by $40 per unit. d.Process further, the company will be better off by $58 per unit. 3.Cyprus Corp. has excess capacity.
Under what situations should the company accept a special order for less than the current selling price? a.When the company thinks it can use the cheaper materials without the customer's knowledge b.When incremental revenues exceed incremental costs c.Never d.When additional fixed costs must be incurred to accommodate the order 4.The focus of a sell or process further decision is a.incremental revenue. b.incremental cost. c.both incremental revenue and incremental cost. d.neither incremental revenue nor incremental cost.