Marsden manufactures a cat food product called Special Export. Marsden currently has 7,000 bags...
Question:
Marsden manufactures a cat food product called Special Export. Marsden currently has 7,000 bags of Special Export on hand. The variable production costs per bag are $1.8 and total fixed costs are $7,000. The cat food can be sold as it is for $9 per bag or be processed further into Prime Cat Food and Feline Surprise at an additional $2,300 cost. The additional processing will yield 7,000 bags of Prime Cat Food and 3,450 bags of Feline Surprise, which can be sold for $8 and $6 per bag, respectively.
If Special Export is processed further into Prime Cat Food and Feline Surprise, the total gross profit would be _____.
a. $76,700
b. $54,800
c. $79,000
d. $74,400
e. $61,800
Gross Profit:
The gross profit of a company is presented as a line item on its income statement, and it is the difference between its net sales revenue and the Cost of Goods Sold. It is also often expressed as a percentage of sales revenue, called the gross profit margin.
Answer and Explanation: 1
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The correct option is b.
Gross profit is an accounting term and to calculate it we use the total final sales revenue and the Cost of Goods Sold...
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