Maxim manufactures a cat food product called Green Health. Maxim currently has 1
ID: 2485601 • Letter: M
Question
Maxim manufactures a cat food product called Green Health. Maxim currently has 10,000 bags of Green Health food on hand. The variabe production costs per bag are $10,000. The cat food can be sold as is for $9.25 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,200 cost. The additional processing will yield 10,000 bags of Premium Green and 3,200 bags of Green Deluxe , which can be sold for $8.25 and $6.25 per bag, respectively. If Green Health is processed further into Premium Green and Green Deluxe, the total Gross profit would be: A. $70,200 B. $104,700 C. $80,300 D.$100,300
Explanation / Answer
Sales revenue = (10000*8.25)+(3200* 6.25)
= 82500+ 20000
= 102500
Gross profit = Revenue -Additional cost
= 102500 -2200 = $ 100300
correct option is "D"