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:
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.
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