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Maxim manufactures a hamster food product called Green Health.Maxim currently has 10,000 bags of Green Health on hand. Thevariable production costs per bag are $1.80 and total fixed costsare $10,000. The hamster food can be sold as it is for $9.00 perbag or be processed further into Premium Green and Green Deluxe atan additional $2,000 cost. The additional processing will yield10,000 bags of Premium Green and 3,000 bags of Green Deluxe, whichcan be sold for $8 and $6 per bag, respectively. The net advantage(incremental income) of processing Green Health further intoPremium Green and Green Deluxe would be:

$98,000.

$96,000.

$8,000.

$6,000.

$2,000.

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Jamar Ferry
Jamar FerryLv2
28 Sep 2019

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