A company has already incurred a $100 cost in partially producing its two products. Their selling prices when partially and fully processed are shown in the table below with the additional costs necessary to finish their processing. Based on this information, the company should process only product A further.
$$\begin{array} { | c | c | c | c | }
\hline \text { Product } & \begin{array} { c }
\text { Unfinished } \
\text { Selling Price }
\end{array} & \begin{array} { c }
\text { Finished } \
\text { Selling Price }
\end{array} & \begin{array} { c }
\text { Further } \
\text { Processing } \
\text { Costs }
\end{array} \
\hline \text { A } & \$ 200 & \$ 300 & \$ 120 \
\hline \text { B } & \$ 75 & \$ 130 & \$ 45 \
\hline
\end{array}$$

Question

A company has already incurred a $100 cost in partially producing its two products. Their selling prices when partially and fully processed are shown in the table below with the additional costs necessary to finish their processing. Based on this information, the company should process only product A further.
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Product } & \begin{array} { c } 
\text { Unfinished } \
\text { Selling Price }
\end{array} & \begin{array} { c } 
\text { Finished } \
\text { Selling Price }
\end{array} & \begin{array} { c } 
\text { Further } \
\text { Processing } \
\text { Costs }
\end{array} \
\hline \text { A } & \$ 200 & \$ 300 & \$ 120 \
\hline \text { B } & \$ 75 & \$ 130 & \$ 45 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The company should process both products further because the additional profit from further processing exceeds the additional costs for both products.

A Company Has Already Incurred a $100 Cost in Partially