Answer:
National Chemical Company
New Variant of a Chemical Compound:
The effect on total profit if National produces the new compound variant is that total profit increases by $33,200
Explanation:
a) Data:
Selling price of old chemical = $55
Selling price of fined chemical = $78
Initial demand for the new compound = 8,300 gallons
Refining costs for the new compound = $157,700
b) Calculations:
Profit from new fined chemical = $23 ($78 - 55)
Differential Sales revenue = $190,900 ($23 x 8,300)
Differential processing costs $157,700
Effect on total profit = $33,200
c) Refining a chemical always add some value to the chemical. The additional value added is the differential sales revenue that National generates minus the additional processing costs involved to get the chemical refined.
