A Company Has Already Incurred a $12,000 Cost in Partially

question 53

Multiple Choice

A company has already incurred a $12,000 cost in partially producing its two products.Their selling prices when partially and fully processed are shown in the following table with the additional costs necessary to finish their processing.Based on this information,should any products be processed further?
$$\begin{array} { | c | c | c | c | } \hline \text { Product } & \begin{array} { c } \text { Unfinished } \\\text { Selling Price }\end{array} & \begin{array} { c } \text { Finished } \\\text { Selling Price }\end{array} & \begin{array} { c } \text { Further } \\\text { Processing } \\\text { Costs }\end{array} \\\hline \text { A } & \$ 700 & \$ 775 & \$ 65 \\\hline \text { B } & 8 0 0 & 8 8 8 & 8 9 \\\hline\end{array}$$

• A) Both product A and product B should be processed further.
• B) Neither product A nor product B should be processed further.
• C) Only product B should be processed further.
• D) Only product A should be processed further.
• E) A processing further decision cannot be made from the available data.

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Definitions:

Rate Busting

A term used, particularly in labor, to describe the act of working more quickly or efficiently than the expected or standard rate, which can disrupt agreed-upon wage scales or norms.

Group Incentives

Motivational rewards offered to a group of employees for achieving certain goals or performance benchmarks.

Disapproval

The expression of dissatisfaction or disagreement with something or someone, often leading to a negative evaluation or judgment.

Spot Bonus

An unplanned bonus given for employee effort unrelated to an established performance measure.