Setup Corporation buys $100,000 of sand, rock, and cement to produce ready-mix concrete. It sells 10,000 cubic yards of concrete at $30 a cubic yard. The value added by Setup Corporation is

Question

Quizplus · Accepted Answer

The value added by Setup Corporation is the difference between the selling price of the 10,000 cubic yards of concrete and the cost of the sand, rock, and cement used to produce it.

10,000 cubic yards x $30/cubic yard = $300,000 in revenue

The cost of the sand, rock, and cement is not given, but it is assumed to be less than the revenue generated from selling the concrete. Therefore, the value added by Setup Corporation is $300,000 in revenue minus the cost of the materials, which is less than $300,000. The only answer choice that reflects this is C.

Setup Corporation Buys $100,000 of Sand, Rock, and Cement to Produce