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Carraba Company gathered the following data about the two products that it produces:

Current Sales Estimated Added Sales Value if
Product Value Processing Costs Processed Further
A $10,000 $3,000 $14,000
B 11,000 2,000 12,000

Which of the products should be processed further?

A. Both products because profits for product A will be $11,000 and profits for product B will be $10,000.

B. Product B because profits increase by $1,000 which exceeds the increase of product B.

C. Product A because profits increase by $1,000 whereas Product A produces a decrease in profits.

D. Both products because revenue will increase by $4,000 for product A and by $1,000 for product B.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M943097

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