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Maxim manufactures a hamster 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 hamster food product called Green Health Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $3.70 and total fixed costs are $10,000. The hamster food can be sold as it is for $9.05 per bag or be processed further into Premium Green and Green Deluxe at an additional $2100 cost The additional processing will yield 10,000 bags of Premium Green and 3100 bags of Green Deluxe, which can be sold for $8.05 and $6.05 per bag, respectively. The net advantage (incremental income) of processing Green Health further into Premium Green and Green Deluxe would be $6655 $99,255 $97,155 $2100 $8755
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