Marsden manufactures a cat food product called Special Export. Marsden currently has 16,000 bags of Special Export on hand. The variable production costs per bag are $1.8 and total fixed costs are $16,000. The cat food can be sold as it is for $9.0 per bag or be processed further into Prime Cat Food and Feline Surprise at an additional $3,200 cost. The additional processing will yield 16,000 bags of Prime Cat Food and 4,800 bags of Feline Surprise, which can be sold for $8.0 and $6.0 per bag, respectively.

The net advantage (incremental income) of processing Special Export further into Prime and Feline Surprise would be:

$12,800

$9,600

$156,800

$3,200

$153,600