Walton, Inc. makes an unassembled product that it currently sells for $55. Produ
ID: 2430934 • Letter: W
Question
Walton, Inc. makes an unassembled product that it currently sells for $55. Production costs are $20. Walton is considering assembling the product and selling it for $68. The cost to assemble the product is estimated to be $12. What decision should Walton maek?
process further because NI will be $13 greater
sell before assembly because NI per unit will be $12 greater
process further because NI will be $1 greater
sell before assembly because NI per unit will be $1 greater
a.process further because NI will be $13 greater
b.sell before assembly because NI per unit will be $12 greater
c.process further because NI will be $1 greater
d.sell before assembly because NI per unit will be $1 greater
Explanation / Answer
Option C is the correct answer because
There are two situation :
1. Unassembled Product
Selling price = $ 55
Production cost = $ 20
NI = selling price - production cost
= $55 - $ 20
= $ 35
2. Assembled Product
Selling cost = $ 68
Production cost = $ 20
Assembling cost = $ 12
NI = Selling cost - ( production cost + assembling cost )
= $ 68 - ($20 + $12)
= $ 36
Therefore, process further because NI will be $1 ($36- $35) greater.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.