Problem:
Marsden manufactures a cat food product called Special Export. Marsden currently has 5,000 bags of Special Export on hand. The variable production costs per bag are $1.9 and total fixed costs are $5,000. The cat food can be sold as it is for $9.1 per bag or be processed further into Prime Cat Food and Feline Surprise at an additional $2,100 cost. The additional processing will yield 5,000 bags of Prime Cat Food and 3,150 bags of Feline Surprise, which can be sold for $8.1 and $6.1 per bag, respectively.
Required:
The net advantage (incremental income) of processing Special Export further into Prime and Feline Surprise would be:
- $12,115
- $14,215
- $59,715
- $2,100
- $57,615
Note: Please show the work not just the answer.