Marlow Company makes bulk quantities of cleaning fluids. They currently sell 1,200 containers a month at a price of $23.75 per unit. If they add a new scent, they could charge $25 per unit for the improved product. It would cost them a total of $800 per month to make that alteration. If they decide to process further, it will improve their operating income.

Question

Quizplus · Accepted Answer

By adding a new scent and charging a higher price, the company can increase their revenue. The additional cost of $800 per month is not significant compared to the potential increase in profits. Therefore, processing further could improve their operating income.

Marlow Company Makes Bulk Quantities of Cleaning Fluids