Carmen Co. can further process Product J to produce Product D. Product J is curr

Question

Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20 per pound and costs $15.75 per pound to produce. Product D would sell for $38 per pound and would require an additional cost of $8.55 per pound to produce. 6. What is the differential cost of producing Product D? a. $6.50 per pound b. $8.55 per pound c. $17.00 per pound d. $5.25 per pound 7. What is the differential revenue of producing Product D? a. $6.75 per pound b. $22.25 per pound c. $18.00 per pound d. $6.25 per pound

Explanation / Answer

differential cost of producing Product D

Cost of Product (J + D) - Cost of Product J

($15.75 + $8.55) - $15.75 = $8.55 is the additional cost of producing Product D

Diffrential revenue for Product D

Revenue (D) - Revenue (J)

$38 - $20 = $18

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