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SELL OR PROCESS FURTHER Jeffers Inc. has decided to discontinue its Basic model...

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Accounting

SELL OR PROCESS FURTHER

Jeffers Inc. has decided to discontinue its Basic model DVD player. They currently have a number of partially completed units on hand that have incurred $50 of costs per unit. They could complete them incurring the following additional unit costs:

Direct materials $10

Direct labor $20

Variable overhead $ 5

Fixed overhead $30

The fixed costs relate to depreciation on plant assets.

If Jeffers completes the DVD players they can be sold at $100 per unit. However, another company is willing to buy the DVD players as is for $60.

REQUIRED:

  1. What should Jeffers do?

  1. By how much is this preferable to the next best alternative?

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