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Products A, B and C are produced from a single

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Products A, B and C are produced from a single raw material input. The raw material costs $90,000, from which 5,000 units of A, 10,000 units of B, and 15,000 units of C can be produced each period. Product A can be sold at the split off point for $2 per unit, or it can be processed further at a cost of $12,500 and then sold for $5 per unit.;Product A should be;A. sold at the split-off point, since further processing would result in a loss of $0.50 per unit.;B. sold at the split-off point, since further processing will result in a loss of $2,500 each period.;C. processed further, since this will increase profits by $12,500 each period.;D. processed further, since this will increase profits by $2,500 each period.

 

Paper#33149 | Written in 18-Jul-2015

Price : $27
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