Question
Maxim manufactures a cat food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag
Maxim manufactures a cat food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $2.70 and total fixed costs are $10,000. The cat food can be sold as it is for $9.95 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,900 cost. The additional processing will yield 10,000 bags of Premium Green and 3,900 bags of Green Deluxe, which can be sold for $8.95 and $6.95 per bag, respectively. If Green Health is processed further into Premium Green and Green Deluxe, the total gross profit would be:
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