Mink Manufacturing is unsure of whether to sell its product assembled or unassem
ID: 2378484 • Letter: M
Question
Mink Manufacturing is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $60 and Mink would sell it for $130. The cost to assemble the product is estimated at $42 per unit and the company believes the market would support a price of $170 on the assembled unit. What decision should Mink make?
Sell before assembly, the company will be better off by $40 per unit.
Process further, the company will be better off by $58 per unit.
Process further, the company will be better off by $28 per unit.
Sell before assembly, the company will be better off by $2 per unit.
Sell before assembly, the company will be better off by $40 per unit.
Explanation / Answer
Profit on unassembled product = $130-$60 = $70
Profit on assembled product = $170-60-42 = $68
Diffrence in profit = $70-$68 = $2
Sell before assembly, the company will be better off by $2 per unit.