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Chino Company manufactures fabric and clothing. Managers can either sell the unfinished fabric to other clothing manufacturers or incur additional conversion costs to create a finished garment. The costs incurred to produce the unfinished fabric are $400,000, which are allocated to the products based on the sales value of the unfinished fabric. Following is information concerning the clothing that can be produced from the fabric: Product Pants Shirts Coats Number of Units 6,000 12,000 4,000 Selling Price of Unfinished Fabric $20.00 23.20 38.80 Selling Price after Processing Further $30.00 32.40 43.20 Additional Processing Cost $28,450 64,400 18,300 Required: 2-a. Calculate the increase or decrease in profit if the products are processed further. 2-b. Which products should be sold as unfinished fabric and which should be further processed? 3. Assume that the $400,000 in costs is allocated based on the number of units of output. Which products should be sold as unfinished fabric and which should be further processed? Req 2A Req 2B Reg 3 Calculate the increase or decrease in profit if the products are processed further. (Decreases should be entered as a negative value.) Profit Pants Shirts Coats Req 2A Reg 2B Req3 Which products should be sold as unfinished fabric and which should be further processed? Action Pants Shirts Coats Req 2A Reg 2B Reg 3 Assume that the $400,000 in costs is allocated based on the number of units of output. Which products should be sold as unfinished fabric and which should be further processed? Action Pants Shirts Coats

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