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

Question

Marsden manufactures a cat food product called Special Export. Marsden currently has 17,000 bags of Special Export on hand. The variable production costs per bag are $1.9 and total fixed costs are $17,000. The cat food can be sold as it is for $9.1 per bag or be processed further into Prime Cat Food and Feline Surprise at an additional $3,300 cost. The additional processing will yield 17,000 bags of Prime Cat Food and 4,950 bags of Feline Surprise, which can be sold for $8.1 and $6.1 per bag, respectively.

$167,895

$13,195

$3,300

$164,595

$9,895

Marsden manufactures a cat food product called Special Export. Marsden currently has 17,000 bags of Special Export on hand. The variable production costs per bag are $1.9 and total fixed costs are $17,000. The cat food can be sold as it is for $9.1 per bag or be processed further into Prime Cat Food and Feline Surprise at an additional $3,300 cost. The additional processing will yield 17,000 bags of Prime Cat Food and 4,950 bags of Feline Surprise, which can be sold for $8.1 and $6.1 per bag, respectively.

Explanation / Answer

Answer: Final Sales Value= (17000*8.1)+(4950*6.1) = 167895

Less: Sales value without further processing= 17000*9.1= 154700

Less: Further Processing cost= 3300

Incremental revenue= $9895

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