Question

Concord Corporation is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $24 and Concord would sell it for $58. The cost to assemble the product is estimated at $22 per unit and the company believes the market would support a price of $75 on the assembled unit. What decision should Concord make?

Answer 1

Answer:

Concord should not sell the assembled product.

Explanation:

Unassembled:

Sell price: $58 - Cost $24 = Profit $34

Assembled:

Sell price: $75 - Cost $46 ($24 + $22)  = Profit $29

Selling the assembled unit decreases the profit of Concord Corporation.