Walton, Inc

question 7

Multiple Choice

Walton, Inc.is unsure of whether to sell its product assembled or unassembled.The unit cost of the unassembled product is $16, while the cost of assembling each unit is estimated at $17.Unassembled units can be sold for $55, while assembled units could be sold for $71 per unit.What decision should Walton make?

• A)Sell before assembly; the company will save $1 per unit.
• B)Sell before assembly; the company will save $15 per unit.
• C)Process further; the company will save $1 per unit.
• D)Process further; the company will save $16 per unit.

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Definitions:

Budgeted Balance Sheet

A financial statement projecting the future financial position of a company, based on expected assets, liabilities, and equity.

Continuous Budget

A 12-month budget that rolls forward one month as the current month is completed.

Rolls Forward

A process in accounting or financial planning where data or balances are brought forward from a previous period to the current one.

Manufacturing Overhead Budget

A detailed plan showing the production costs, other than direct materials and direct labor, that will be incurred over a specified time period.