Marsden manufactures a cat food product called Special Export. Marsden currently

Question

Marsden manufactures a cat food product called Special Export. Marsden currently has 10,000 bags of Special Export on hand. The variable production costs per bag are $1.90 and total fixed costs are $10,000. The cat food can be sold as it is for $9.15 per bag or be processed further into Prime Cat Food and Feline Surprise at an additional $2,100 cost. The additional processing will yield 10,000 bags of Prime Cat Food and 3,100 bags of Feline Surprise, which can be sold for $8.15 and $6.15 per bag, respectively. If Special Export is processed further into Prime Cat Food and Feline Surprise, the total gross profit would be

Explanation / Answer

Prime Cat Food Feline Suprices Total No. of bags 10000 3100 Sale price per bag $8.15 $6.15 Sales Revenue if it is processed further $81,500.00 $19,065.00 $100,565.00 Sales revenue $100,565.00 Less: Variable cost (1.9*10000) 19000 Less: Fixed Cost 10000 Less: Cost for further processing 2100 Total Cost 31100 Gross Profit $69,465.00 Ans

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