It costs Glenwood,Inc.$70 per unit to manufacture 1,000 units per month of a product that it can sell for $100 each.Alternatively,Glenwood could process the units further into a more complex product,which would cost an additional $40 per unit.Glenwood could sell the more complex product for $145 each.How would processing the product further affect Glenwood's profit?
A)Profit would increase by $5,000.
B)Profit would increase by $45,000.
C)Profit would decrease by $5,000.
D)Profit would decrease by $45,000.

Question

Quizplus · Accepted Answer

Processing further costs an additional $40 per unit, making the total cost $110 ($70 + $40) per unit. Selling at $145 each results in a $35 profit per unit over the cost of production ($145 - $110). Without further processing, the profit per unit is $30 ($100 - $70). The increase in profit is $5 per unit ($35 - $30), and for 1,000 units, this results in a $5,000 increase in profit.

It Costs Glenwood,Inc