Question
A chemical company spent $532,000 to produce 150,000 gallons of a chemical which can be sold for $4.80 per gallon. The chemical can be further
A chemical company spent $532,000 to produce 150,000 gallons of a chemical which can be sold for $4.80 per gallon. The chemical can be further processed into a weed killer which can be sold for $9.20 per gallon, it will cost $270,000 to process the chemical into a weed killer. Which of the following is true?
A) If the company decides to process it further, it will increase operating income$578,000
B) If the company decides to process it further, it will increase operating income $390,000
C) If the company decides to process it further, it will decrease operating income by $1,380,000
D) To maximize operating income, the company should continue to sell the chemical as is.
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