Question

Hill Country BBQ can further process 3,200 pounds of regular brisket to produce GoldStar Prime (G.P.). Regular is currently selling for $7 per pound and cost $3 per pound to produce. G.P. is sure good and sells for $11 per pound and would require additional processing costs of $2.50 to produce. What is the differential Total Net Revenue of producing GoldStart Prime?

Answer 1

Answer:

$4,800

Explanation:

The differential total net revenue is the difference between the revenue generated from selling 3,200 pounds of GoldStar Prime to the revenue generated from selling 3,200 pounds of regular brisket.

Regular brisket revenue (R):

$R = 3,200*(\ 7-\ 3)\\R=\ 12,800$

GoldStar Prime revenue (G):

$G = 3,200*(\ 11-(\ 3+\ 2.50))\\G=\ 17,600$

The differential Total Net Revenue (D) is:

$D= G - R\\D = \ 17,600-\ 12,800\\D=\ 4,800$

The answer is $4,800