Carraba Company gathered the following data about the two products that it produ
ID: 2376157 • Letter: C
Question
Carraba Company gathered the following data about the two products that it produces:
Current Sales
Estimated Added
Sales Value if
Product
Value
Processing Costs
Processed Further
A
$10,000
$3,000
$14,000
B
11,000
2,000
12,000
Which of the products should be processed further?
Answer
A.
Both products because profits for product A will be $11,000 and profits for product B will be $10,000.
B.
Product B because profits increase by $1,000 which exceeds the increase of product B.
C.
Product A because profits increase by $1,000 whereas Product A produces a decrease in profits.
D.
Both products because revenue will increase by $4,000 for product A and by $1,000 for product B
Current Sales
Estimated Added
Sales Value if
Product
Value
Processing Costs
Processed Further
Explanation / Answer
product A: if processed profit = 14000-(10000+3000) = $1000
product B: profit = 12000-(11000+2000) = -1000 that is loss
so current option is C