Reason Food Store has 4,000 pounds of raw pork approaching its expiration date.Each pound has a cost of $4.50.The pork could be sold 'as is' for $3.00 per pound to the dog food processing plant, or roasted and sold in the deli.The cost of roasting the pork will be $2.80 per pound and each pound could be sold for $6.50.What should be done with the pork and why?
A)The pork should be thrown away since there will be a loss with each of the other alternatives.
B)The pork should be processed further since the sales price increases by $3.50 per pound and the cost only increases by $2.80 per pound.
C)The pork should be sold 'as is' since there is no reason to put more cost into a product that is already selling below its $4.50 cost.
D)It does not matter which option is undertaken since all alternatives result in a loss.

Question

Quizplus · Accepted Answer

Processing the pork further by roasting it and selling it in the deli will result in a profit of $3.70 per pound ($6.50 selling price - $2.80 roasting cost), while selling it 'as is' to the dog food processing plant will result in a loss of $1.50 per pound ($3.00 selling price - $4.50 cost). Therefore, the best choice is to process the pork further by roasting it and selling it in the deli.

Reason Food Store Has 4,000 Pounds of Raw Pork Approaching