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Hannah's Homemade Cookies produces and sells delicious shortbread cookies. The cost of producing a bag of cookies is $.65 and the bag sells for $3.75. Hannah is considering processing all the cookies further by dipping them in chocolate. The additional processing costs would be $.50 per bag and the sales price of the chocolate-dipped cookies would be $4.20 per bag. If Hannah can sell 5,000 bags of either type of cookie per year, which of the following statements is true if she chooses to process the cookies further?

a. Net income would increase by $15,250 per year.

b. Net income would decrease by $2,500 per year.

c. Net income would increase by $2,250 per year.

d. Net income would decrease by $250 per year.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M939593

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