David's Microchip Company (DMC) produces microchips for MP₃ players, which it sells for $18 million to John Smith Electronics (JSE).JSE's MP₃ players are sold for a total of $22 million.What is the value added to JSE?
A)$6 million
B)$4 million
C)$10 million
D)$26 million

Question

Quizplus · Accepted Answer

The value added to JSE is calculated as the difference between the total revenue earned by JSE from selling the MP₃ players ($22 million) and the cost of purchasing the microchips from DMC ($18 million). Therefore, the value added to JSE is $22 million - $18 million = $4 million. Therefore, the best choice is C.

David's Microchip Company (DMC) Produces Microchips for MP₃ Players, Which