Question

Question 23

Ahngram Corp. has 1,000 carton of oranges that cost $12 per carton in direct costs and $17.00 per carton in indirect costs and sold for $32 per carton. The oranges can be processed further into orange juice at an additional cost of $13.00 and sold at a price of $50. The incremental income (loss) from processing the oranges into orange juice would be:

Answer 1

Ans:

Orange costs for 1,000 cartons :

Direct costs : $12 per carton

Indirect costs : $17 per carton

Total costs : $12 + $17 = $29

Selling Price : $32 per carton

Profit : $32 - $29 = $3 per carton.

Further Processing cost : $13

Total costs after further processing : $29 + $13 = $42

Selling price for orange Juice : $50

Profit per carton : $50 - $42 = $8

Incremental profit for 1,000 carton:

1,000 * ($8 - $3) = $5,000

So correct answer is $5,000.

For any query please ask in comment box, we are happy to help you. Also please don't forget to provide your valuable feedback. Thanks!

answered by: anonymous