Accounting for Decision Makers -Discussion Question Assignment - 2

Accounting for Decision Makers -Discussion Question - Assignment ExampleThe decision to further process a product after the split-off point invites further terms and revenues known as the incremental cost and revenues (Sell-or-process-further decision, 2013).Management accountants can support the decision to process further only if it generates more revenue than costs. Based on the case of the fashion Allen Chemical company, raw material D is used in the production of products E and F. Based on the case, $ century is the cost of converting hundred liters into 60 liters and 40 liters of products E and F respectively. Therefore, the cost of producing 60 liters of product E = (60/100)*100 = $ 60, while the cost of producing 40 liters of product F = (40/100)*100 = $ 40. Product F can be sold at $ 6 or can be further processed at an additional cost of $5/liter and can be sold for $ 13/liter. Based on the information, the incremental revenue per liter = (13 6) = $ 7. The approach of th e analysis is incremental costs as done below (Hartgraves & Morse, 2015).Based on the above table, the decision to process product F further generates more revenue than the cost incurred ($ 80). The incremental approach states that when the difference between the incremental revenue and incremental cost is positive, the process further decision should be implemented. Otherwise, the decision to sell is suitable (Hartgraves & Morse, 2015). Therefore, Port Allen Chemical Company should further process product