Mane Street sells 3,000 economy-size bottles of shampoo for $10 per bottle. The cost to manufacture the shampoo is $5.00 per bottle. Further variable processing costs of

$4 per bottle for the shampoo would convert it into a shampoo/conditioner, which Mane Street could sell for $18 per bottle. Variable selling costs are $1 per bottle for the shampoo, but for the shampoo/conditioner they would be $2.50 per unit.

Required: Based on this information and assuming that Mane Street can sell 3,000 bottles of shampoo/conditioner, prepare an analysis to answer each of the following questions.

(1) Should Mane Street process the shampoo further into a shampoo/

conditioner?

(2) If the selling price per unit of the shampoo/conditioner dropped to $15 per bottle, should Mane Street process the shampoo further into a shampoo/conditioner?

 TYK-1