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54 A company that currently produces final product A is considering stopping processing earlier in the production process and selling the intermediate product on
54 A company that currently produces final product A is considering stopping processing earlier in the production process and selling the intermediate product on the market. The final product sells for $100 per unit, whereas the firm believes it can sell the partially processed intermediate product for $75 per unit. The firm sells 1,000 units per quarter and faces a total finished processing cost of $10,000 per quarter after split-off. Should the firm sell the intermediate good or the final good? The intermediate good, because final good sales decrease profits by $15,000 The final good, because final good sales increase profits by $25,000 The intermediate good, because final good sales decrease profits by $25,000 The final good, because final good sales increase profits by $15,000
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