Question

Grace Co. can further process Product B to produce Product C. Product B is currently selling for $21 per pound and costs $14 per pound to produce. Product C would sell for $42 per pound and would require an additional cost of $11 per pound to produce. What is the differential revenue of producing and selling Product C?

a.$21 per pound

b.$31 per pound

c.$28 per pound

d.$42 per pound

Answer 1

Calculation of differential revenue:

Differential revenue= selling price of product C- selling price of product B

                           = 42-21

                           = 21

So correct answer is a) $21