Question

Suppose that furniture production encompasses the following stages: Stage 1: Trees are sold to lumber company. $1,000 Stage 2: Lumber is sold to furniture company. $2,500 Stage 3: Furniture company sells furniture to retail store. $6,000 Stage 4: Furniture store sells furniture to consumer. $12,000 Instructions: Enter your responses rounded to the nearest whole number. a. What is the value added at each stage?

Answer 1

Explanation:

The computation of the value added at each stage is

Stage                 Value of transaction       Added value

1                          $1,000                             $1,000        

2                         $2,500                             $1,500      ($2,500 - $1,000)

3                         $6,000                             $3,500   ($6,000 - $2,500)

4                         $12,000                             $6,000  ($12,000 - $6,000)