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Sell or Process Further
Great Lakes Boat Company manufactures sailboat hulls at a cost of $4,200 per unit. The hulls are sold to boat yards for $4,800. The company is evaluating the desirability of adding masts, sails, and rigging to the hulls prior to sale at an additional cost of $2,600. The completed sailboats could then be sold for $6,900 each.
Question 1: Determine whether the company should sell sailboat hulls or process them further into complete sailboats. Assume sales volume will not be affected.
Question 2: Calculate the net advantage (disadvantage) of processing the boat hulls into sail boats. Use a negative sign with your answer, if appropriate.
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