Marsden manufactures a cat food product called Special Export. Marsden currently has 17,000 bags of Special Export on hand. The variable production costs per bag are $1.9 and total fixed costs are $17,000. 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 $3,300 cost. The additional processing will yield 17,000 bags of Prime Cat Food and 4,950 bags of Feline Surprise, which can be sold for $8.1 and $6.1 per bag, respectively.
| The net advantage of processing Special Export further into Prime and Feline Surprise would be: |
|
$167,895 |
|
$13,195 |
|
$9,895 |
|
$3,300 |
|
$164,595 |