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devlian [24]
3 years ago
14

Grace Co. can further process Product B to produce Product C. Product B is currently selling for $21 per pound and costs $14 per

pound to produce. Product C would sell for $42 per pound and would require an additional cost of $11 per pound to produce. What is the differential revenue of producing and selling Product C?a.$21 per poundb.$31 per poundc.$28 per poundd.$42 per pound
Business
1 answer:
Leno4ka [110]3 years ago
4 0

Answer:

Differential revenue  = $21 per pound

so here correct option is a.$21 per pound

Explanation:

given data

Product B

currently selling = $21 per pound

costs =  $14 per pound

Product C

sell = $42 per pound

additional cost = $11 per pound

to find out

differential revenue of producing and selling Product C

solution

we get here differential revenue that is express as  

Differential revenue = selling price product C  -  selling price product B   ..........1

put here value we get

Differential revenue = $42 - $21

Differential revenue  = $21 per pound

so here correct option is a.$21 per pound

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Given the table showing <span>next year's expected costs and activities below:

\begin{tabular}&#10;{|C||C|C|}&#10; & Mixing & Baking\\[1ex]&#10;Direct labor hours&411,000 DLH&91,000 DLH\\&#10;Maching hours&811,000 MH&811,000 MH\\[1ex]&#10;Overhead costs&\$534,300&\$411,000&#10;\end{tabular}

Pard A:

</span><span>Aztec's departmental overhead rate for the mixing department based on direct labor hours is given by the mixing department's overhead cost divided by the mixing department's direct labor hours.

Thus, </span><span>departmental overhead rate for the mixing department based on direct labor hours is given by:

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Part B:

</span>Aztec's departmental overhead rate for the baking department based on direct labor hours <span>is given by the baking department's overhead cost divided by the baking department's direct labor hours.

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\frac{\$411,000}{91,000\ DLH} =\bold{\$4.52\ per\ DLH}



Part 3:

</span></span>Aztec's departmental overhead rate for the baking department based on machine hours <span>is given by the baking department's overhead cost divided by the baking department's machine hours.

</span><span>Thus, <span>departmental overhead rate for the baking department based on machine hours is given by:

\frac{\$411,000}{811,000\ MH} =\bold{\$0.51\ per\ MH}</span></span>
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