Marsden manufoctures a cat food product called Special Export Marsden currently

Question

Marsden manufoctures a cat food product called Special Export Marsden currently has 16.000 bags of Special Export on hand. The veriable production costs per bag are $1.8 and total foxed costs are $16.000. The cat food can be sold as it is for $9 0 per bag or be processed further into Prime Cat Food and Feline Surprise at an addirional $3.200 cost. The additional processing wil yjeld 16.000 bags of Prime Cat Food and 4,800 bags of Feline Surprise, which can be sold for $8.0 and $6.0 per bag, respectively The net advantage (incremental income) of processing Special Export further into Prime and Feline Surpnise would be O $153.600 O $3.200 O $156.800 O $12.800 O $9,600

Explanation / Answer

Calculation of net advantage of processing Special Export further into Prime and Feline Surprise Sold as it is Further Processed Special Export Prime Cat Food Feline Surprise Total Net Advantage (Incremental Income) Sales $144,000 $128,000 $28,800 $156,800 Less : Variable Costs $28,800 $28,800 Less : Fixed Cost $16,000 $16,000 Less : Additional Cost of processing $0 $3,200 Net Income $99,200 $108,800 $9,600 The answer is $9600

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