Hill Co. can further process Product O to produce Product P. Product O is currently selling for $60 per pound and costs $42 per pound to produce. Product P would sell for $82 per pound and would require an additional cost of $13 per pound to produce.
The differential cost of producing Product P is $13 per pound.

Question

Quizplus · Accepted Answer

Differential cost is the additional cost incurred to produce a new product or to make changes in an existing one. In this case, the additional cost required to produce Product P is given as $13 per pound, which makes it the differential cost of producing Product P. Therefore, the statement is true.

Hill Co Can Further Process Product O to Produce Product P