Question
A company is considering producing one of two products. Product A has a fixed cost of $10,000 and a variable cost of $20 per unit,
A company is considering producing one of two products. Product A has a fixed cost of $10,000 and a variable cost of $20 per unit, it can sell for $40 per unit. Product B has a fixed cost of $20,000 and a variable cost of $25 per unit, it can sell for $50 per unit. The company's sales forecast indicates, they can only sell 600 units of one of the two products. Which of the following statements is true? A company is considering producing one of two products. Product A has a fixed cost of $10,000 and a variable cost of $20 per unit, it can sell for $40 per unit. Product B has a fixed cost of $20,000 and a variable cost of $25 per unit, it can sell for $50 per unit. The company's sales forecast indicates, they can only sell 600 units of one of the two products. Which of the following statements is true?
Company should produce product B and gain $30,000 in profit.
Company should produce product A and gain $2,000 profit.
Company should produce product A and gain $24,000 in profit.
Company should produce product B and gain $5,000 in profit.
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Enterprise Risk Management In Finance
Authors: David L. Olson, Desheng Dash Wu
1st Edition
1349691038, 978-1349691036
