Question
. Sugarhill Products makes a wood product in three sizes: small, medium, and large. Currently, the company does not stain any of the products, but
. Sugarhill Products makes a wood product in three sizes: small, medium, and large. Currently, the company does not stain any of the products, but market research has indicated that they can be sold with or without a finishing stain. The following information is available (3 points):
Small | Medium | Large | |||||||||
Initial sales price | $1,500 | $2,300 | $4,000 | ||||||||
Initial cost | 500 | 800 | 1,300 | ||||||||
Sales price after staining | 1,650 | 2,400 | 4,400 | ||||||||
Cost of staining | 100 | 190 | 300 | ||||||||
Number sold per year | 300 | 300 | 150 | ||||||||
Required:
A. | Which products should be stained? Support your answer with calculations. |
B. | If all the products are stained, what is the overall effect on net income? Support your answer with calculations. |
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