A company has already incurred a $600 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 both products further.
$$\begin{array} { | c | c | c | c | }
\hline \text { Product } & \begin{array} { c }
\text { Unfinished } \
\text { Selling Price }
\end{array} & \begin{array} { c }
\text { Finished } \
\text { Selling Price }
\end{array} & \begin{array} { c }
\text { Further } \
\text { Processing } \
\text { Costs }
\end{array} \
\hline \text { A } & \$ 425 & \$ 500 & \$ 70 \
\hline \text { B } & \$ 375 & \$ 400 & \$ 20 \
\hline
\end{array}$$

Question

A company has already incurred a $600 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 both products further.
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Product } & \begin{array} { c } 
\text { Unfinished } \
\text { Selling Price }
\end{array} & \begin{array} { c } 
\text { Finished } \
\text { Selling Price }
\end{array} & \begin{array} { c } 
\text { Further } \
\text { Processing } \
\text { Costs }
\end{array} \
\hline \text { A } & \$ 425 & \$ 500 & \$ 70 \
\hline \text { B } & \$ 375 & \$ 400 & \$ 20 \
\hline
\end{array}$$

Quizplus · Accepted Answer

For Product A, the additional profit from further processing is $500 - $425 - $70 = $5. For Product B, the additional profit is $400 - $375 - $20 = $5. Since both products yield a positive profit from further processing, the company should process both products further.

A Company Has Already Incurred a $600 Cost in Partially