Question

Highway 151 Inc. can further process 2,500 pounds of Product C to produce Product M. Product C is currently selling for $36 per pound and costs $14 per pound to produce. Product M would sell for $47 per pound and would require an additional cost of $9 per pound to produce. What is the differential Total Net Revenue of producing Product M?

Answer 1

Answer:

$27,500

Explanation:

Revenue from the sale of  Product C = $36 × 2500

                                                             = $90,000

Cost to produce Product C = $14 × 2500

                                             = $35,000

Revenue from the sale of Product M = $47 × 2500

                                                              = $117,500

Differential Total Net Revenue of producing Product M

= $117,500 - $90,000

= $27,500