Question

Maxim manufactures a hamster food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $1.80 and total fixed costs are $10,000. The hamster food can be sold as it is for $9.00 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,000 cost. The additional processing will yield 10,000 bags of Premium Green and 3,000 bags of Green Deluxe, which can be sold for $8 and $6 per bag, respectively. The net advantage (incremental income) of processing Green Health further into Premium Green and Green Deluxe would be:
A. $98,000.
B. $96,000.
C. $8,000.
D. $6,000.
E. $2,000.

Answer 1

The net advantage (incremental income) of processing Green Health further into Premium Green and Green Deluxe would be:

Explanation:

Concept and region

Financial Statement

The statement is prepared for the specific period which comprises the financial information of the organization. it includes the statement of the income which shows the profitability of the business, balance sheet which shows the financial position in the terms of the asset. liability and capital, and cash flow statement (CFS) which represents the cash flows for the accounting period.

Fundaments

Sales:

It refers the revenue which is earned by the core business of the organization the units sold during the period are multiplied by the selling price per unit in order to determine the amount of sales.

The incremental revenue of the company is $6,000.