Marsden manufactures a cat food product called Special Export. Marsden currently
ID: 2902218 • Letter: M
Question
Marsden manufactures a cat food product called Special Export. Marsden currently has 24,000 bags of Special Export on hand. The variable production costs per bag are $1.7 and total fixed costs are $24,000. The cat food can be sold as it is for $9.2 per bag or be processed further into Prime Cat Food and Feline Surprise at an additional $4,000 cost. The additional processing will yield 24,000 bags of Prime Cat Food and 6,000 bags of Feline Surprise, which can be sold for $8.2 and $6.2 per bag, respectively.
The net advantage (incremental income) of processing Special Export further into Prime and Feline Surprise would be:Explanation / Answer
c) $230,000
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