Question
A company incurred costs of $8,000 in producing 1,000 gallons of Chemical A. Chemical A can be sold for $12 per gallon now or processed
A company incurred costs of $8,000 in producing 1,000 gallons of Chemical A. Chemical A can be sold for $12 per gallon now or processed further at a cost of $6,000 and then sold for $20 per gallon. Which one of the following actions would be most advantageous to the company and what is the economic effect?
a. Sell Chemical A now; the company would be $10,000 better off
b. Process Chemical A further; the company would be $2,000 better off
c. Sell chemical A now; the company would be $2,000 better off
d. Process Chemical A further; the company would be $16,000 better off
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