It costs Glenwood, Inc. $100 per unit to manufacture 1,000 units per month of a

Question

It costs Glenwood, Inc. $100 per unit to manufacture 1,000 units per month of a product that it can sell for $160 each. Alternatively, Glenwood could process the units further into a more complex product, which would cost an additional $28 per unit. Glenwood could sell the more complex product for $190 each. How would processing the product further affect Glenwood's profit?

Profit would increase by $30,000.

Profit would increase by $2,000.

Profit would decrease by $2,000.

Profit would decrease by $30,000.

Explanation / Answer

Additional cost of processing=$28

while addition in sales value=($190-$160)=$30

Hence additional profits=($30-$28)*1000 units

=$2000 increase(B).

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