Roxie Company has 17,500 units of its sole product that it produced last year at

Question

Roxie Company has 17,500 units of its sole product that it produced last year at a cost of $45 each. This year's model is superior to last year's and the 17,500 units cannot be sold for their regular selling price of $80 each. Roxie has two alternatives for these items: (1) they can be sold to a wholesaler for $35 each, or (2) they can be reworked at a total cost of $450,000 and then sold for $60 each. The company has enough idle capacity to rework these items without affecting any new production. Which choice would increase the company's profits the most?

Explanation / Answer

selling at $ 35 each would give, 35*17,500= $ 612,500

reworked items would give, (60*17,500)-450,000=$ 600,000

hence selling in wholesale is a better idea, it will give more profit of $ 12,500

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.