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Nelli Mwalilino Chapter 8 Problem 8-18 The cost of production per gram is $2.09 which is (2090)/1000 Calculate the net profit per gram before processing as shown below Product N200 HV87 HMT45 W989...

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Nelli Mwalilino
Chapter 8
Problem 8-18
The cost of production per gram is $2.09 which is (2090)/1000
Calculate the net profit per gram before processing as shown below
ProductN200HV87HMT45W989
Sales price without further processing$1.89$2.93$3.30$0.76
Less:Cost per gram2.092.092.092.09
Net profit/(loss)before processing per gram($0.20)$0.84$1.21($1.33)
To calculate the net profit per gram before processing
ProductN200HV87HMT45W989
Sales price without further processing (a)3.653.444.12.17
Cost per gram before processing2.092.092.092.09
Cost per gram of further processing0.730.530.820.37
Total cost (b)2.822.622.912.46
Net profit /(loss)after processing per gram (a)-(b)0.830.821.19-0.29
Compare the net profits to decide of further processing
ProductN200HV87HMT45W989
Net profit/(loss)before processing per gram($0.20)$0.84$1.21($1.33)
Net profit/(loss)after processing per gram0.830.821.19-0.29
Further processingYESNONOYES
The firm should opt for further processing if the net profit/(loss)after processing is more than net profit /(loss)before processing.
Answered Same DayDec 26, 2021

Solution

Robert answered on Dec 26 2021
72 Votes
Memo
To: CEO, XYZ Co Pvt Ltd.
From: Strategic Analyst
Subject: Recommendations regarding processing
Dear Sir,
As per the information received regarding net profit and losses for different products for evaluations before and after the processing, a range of observations are performed and the results are indicated in the following table.
Relevant Cost Analysis
N200HV87HMT45W989Total
Net profit/(loss) - Sold without processing (per gram) A
($0.20)$0.84$1.21($1.33)$0.52
Net profit/(loss) - Sold after processing (per gram) B
$0.83$0.82$1.19($0.29)$2.55
Recommendation of Further processing YESNONOYES
Total grams per batch C
200 300 150 350 1,000
Net profit/(loss) - Sold without processing (A x C)
($40.00)$252.00$181.50($465.50)($72.00)
Most /Least Profitable products without processing MostLeast
Net profit/(loss) - Sold after processing (B x...
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