Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $28,000
1 answer:
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Answer:
The company president made the wrong decision. They should have produce the chocolate syrup, as it makes more profit per batch.
The product that gives more revenue per batch of cocoa beans is the chocolate syrup (Revenue=$29,300), not the box assorted chocolates (Revenu=$17,300). So the production should have gone to producing chocolate syrup.
Explanation:
The question is incomplete:
<em>- Once processed, each batch of cocoa beans would result in the following sales revenue:</em>
<em>Cocoa powder: $14,000</em>
<em>Chocolate syrup: $104,000</em>
<em>Box assorted chocolates: $202,000</em>
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The cost of post-processing the cocoa powder into chocolate syrup is $65,000.
The cost of post-processing the cocoa powder into box assorted chocolates is $175,000.
The revenue for every product is
Revenue = Sales - Cost of processing
Revenue Cocoa powder
Revenue Chocolate syrup
Revenue Box assorted chocolates
The product that gives more revenue per batch of cocoa beans is the chocolate syrup (Revenue=$29,300), not the box assorted chocolates (Revenu=$17,300). So the production should have gone to producing chocolate syrup.