Question
Our company produces a product that is currently sold for $50 per unit. We are considering processing it further into an upgraded version of the
Our company produces a product that is currently sold for $50 per unit. We are considering processing it further into an upgraded version of the current product. If we do so,we can sell the product for $60,we will incur additional costs of $75,000, andwe can sell 8,000 units.
Which of the following is true?
Sell now at $50 since doing so will maximize operating income.
Process further because operating income will increase by $5,000.
Process further because operating income will increase by $7,500.
Process further because operating income will increase by $8,000.
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