Question

The firm Atlantis, LLC produces submarines as well as an essential input for that product: submarine...

The firm Atlantis, LLC produces submarines as well as an essential input for that product: submarine hulls. Submarine hulls can be sold for a total of $14,000,605 monthly revenue. Finished submarines can be sold for a total monthly revenue of $40,690,000.

Converting submarine hulls into completed submarines requires machinery and labor. The machinery is leased for $10,000,000 per month, and labor salaries are $17,000,000 per month. About $2,000,000 of other costs per month are also incurred.

Which of them following is TRUE?

a.

It is $2,310,605 LESS profitable to sell the input rather than processing it further.

b.

It is $11,690,000 MORE profitable to sell the input rather than processing it further.

c.

It is $11,690,000 LESS profitable to sell the input rather than processing it further.

d.

It is $2,310,605 MORE profitable to sell the input rather than processing it further.

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Answer #1
profit or loss from further process or sell
Finished submarines Sales Value $          4,06,90,000
Less:
Submarine hulls Sale Value $          1,40,00,605
Machinery Leased $          1,00,00,000
labor salaries $          1,70,00,000
Other Cost $              20,00,000
Loss on further sale $            -23,10,605
Correct Option: a
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