Reference: 23_01
Marsden manufactures a cat food product called Special Export. Marsden currently has 10,000 bags of Special Export on hand. The variable production costs per bag are $1.80 and total fixed costs are $10,000. The cat food can be sold as it is for $9 per bag or be processed further into Prime Cat Food and Feline Surprise at an additional $2,000 cost. The additional processing will yield 10,000 bags of Prime Cat Food and 3,000 bags of Feline Surprise, which can be sold for $8 and $6 per bag, respectively.
-If Special Export is processed further into Prime Cat Food and Feline Surprise,the total gross profit would be:
A) $68,000
B) $78,000
C) $96,000
D) $98,000
E) $100,000

Question

Quizplus · Accepted Answer

Sales: (10,000 units x $8) + (3,000 units x $6) $98,000
Variable costs (10,000 x $1.80) 18,000
Fixed costs 10,000
Additional processing costs 2,000
Gross profit $68,000

Reference: 23_01 Marsden Manufactures a Cat Food Product Called Special Export. Marsden