Question
McKinley makes rock climbing tools. It has three products that it also makes the nylon input for. Each nylon type shown below can be sold,
McKinley makes rock climbing tools. It has three products that it also makes the nylon input for. Each nylon type shown below can be sold, as is, for the revenue listed or processed further to make the finished product listed below that nylon type. (Joint costs are less than the revenue of each input.)
Nylon #1 | Nylon #2 | Nylon #3 | |||
Revenue | 100,000 | 80,000 | 45,000 | ||
Rope | Harnesses | Gloves | |||
Revenue | 150,000 | 130,000 | 220,000 | ||
Additional cost | 20,000 | 75,000 | 150,000 |
Based on relevant cost analysis, which of the following is TRUE?
a. The firm should sell Rope, Nylon #2, and Gloves. | |
b. The firm should sell Nylon #1, Nylon #2, and Nylon #3. | |
c. The firm should sell rope, Nylon #1, Harnesses, and Nylon #3. | |
d. The firm should sell Rope, Harnesses, and Gloves. |
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