Question

Maxim manufactures a hamster food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $2.80 and total fixed costs are $10,000. The hamster food can be sold as it is for $8.15 per bag or be processed further into Premium Green and Green Deluxe at an additional $3,000 cost. The additional processing will yield 10,000 bags of Premium Green and 4,000 bags of Green Deluxe, which can be sold for $7.15 and $5.15 per bag, respectively. The net advantage (incremental income) of processing Green Health further into Premium Green and Green Deluxe would be: Multiple Choice $7,600. $10,600. $3,000. $89,100. $92,100.

Answer 1