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The sell now or process further is a decision often faced by the farms and different producers. This decision revolves around the choice of selling a product as it is or to sell a more refined or modified version after further processing. The decision is taken for the selling of joint products. Joint products are a set of two or more products which originally have undergone the same process or manufactured with the very same input called joint process. The point from which the joint product leaves the joint process is termed as the split-off point. It is at this point that the decision of sell now or process further has to be made. This decision is influenced by a set of factors whilst the sole motive is to achieve maximum profit. Sell Now or Process Assignment Help shall illustrate the governing factors of the decision along with ways of projecting the decision.
Factors And Ways
The different factors and ways of Sell Now or Process Further explained in Sell Now or Process Further Assignment Help are
1. Total revenue before further processing: This needs to be calculated for comparison and for reaching an informed decision. It is calculated by generating the product of number of units and the cost of each unit. For detailed account of factors refer Sell Now or Process Assignment Help.
2. Total revenue after processing: This calculation requires a proper and accurate estimation of the variation in the units. Because 1 unit of unprocessed product might not provide exactly one unit of processed product. So once the conversion factor is known, total revenue can be easily estimated.
3. Processing costs: The additional costs shall be incurred pertaining to labour, extra machinery etc. So, all the extra costs are clubbed together under the banner of processing charges. This value is subtracted from the total revenue after processing so as to get the actual profit after processing. For gathering knowledge regarding ways of obtaining the decision, refer Sell Now or Process Assignment Help.
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4. Ways of obtaining the decision: There are three basic approaches for the decision. Namely, differential approach, opportunity cost approach and total project approach. The differential approach calculates the difference between the additional revenues and additional costs of further processing. A positive difference shall indicate that the product should be processed further otherwise not. The opportunity approach calculates difference between total revenue from further processed product and the opportunity cost of not selling the product at split-off point. A positive difference shall indicate greater profits on processing. The last approach of total project is a comparative method. This compares the profits incurred under unprocessed product selling and profits under processed product selling. Whichever is more is chosen ultimately.
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