Maxim manufactures a hamster food product called Green Health. Maxim currently h

Question

Maxim manufactures a hamster food product called Green Health. Maxim currently has 13,500 bags of Green Health on hand. The variable production costs per bag are $2.50 and total fixed costs are $17,000. The hamster food can be sold as it is for $9.00 per bag or be processed further into Premium Green and Green Deluxe at an additional cost. The additional processing will yield 13,500 bags of Premium Green and 3,700 bags of Green Deluxe, which can be sold for $8 and $6 per bag, respectively. Assuming Maxim further processes Green Health further into Premium Green and Green Deluxe, revenue from the two products would be: points $130,200. $128,900. JOOOOO $8,700. $7,400.

Explanation / Answer

Answer:

A.$130,200

Solution: Total revenue from two products

Premium Green - 13,500 bags X $ 8 = $ 108,000

Green Deluxe - 3,700 bags X $ 6= $ 22,200

Total revenue = $ 108,000 + $ 22,200 = $ 130,200

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