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The Canyon Fish Farm raises catfish. During each year the firm spends $6,000 in total to raise 10,000 catfish. At the end of the year,
The Canyon Fish Farm raises catfish. During each year the firm spends $6,000 in total to raise 10,000 catfish. At the end of the year, the catfish can be sold whole for $7.00 each. Alternatively, the firm can spend $0.80 per fish to convert the whole fish into fish fillets. The fillets from one fish sell for $9.40. The Canyon Fish Farm feeds their catfish ground soy meal which they currently make themselves. The cost to produce a pound of soy meal is: Direct material $0.30 Direct labor $0.40 Find overhead $0.20 Total $0.90 per pound Alocal entrepreneur has offered to sell the farm ground soy meal for $.75 per pound. If the soy meal is purchased all material and labor costs will be eliminated. All fixed overhead costs will continue at the same level whether the meal is purchased or produced internally. What will be the per pound effect on Canyon Fish Farm profit if the meal is purchased from the entrepreneur? 50.70 decrease 50.20 increase 50.15 decrease 50.05 decrease
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