Aloe Corporation sells 1,000 units of product A per day at $1.00 per unit. Aloe has the option of processing the product further for additional costs of $400 per day to produce product B, which sells for $1.45 per unit.
If Aloe processes product A further to produce product B, the company's net income will:

Question

Quizplus · Accepted Answer

If processed further, revenue will increase by $0.45 x 1,000 units, or $450. With additional costs of processing of $400, profit will increase by $50 per day.

Aloe Corporation Sells 1,000 Units of Product a Per Day