Question

Maxim manufactures a cat food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $2.10 and total fixed costs are $10,000. The cat food can be sold as it is for $9.35 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,300 cost. The additional processing will yield 10,000 bags of Premium Green and 3,300 bags of Green Deluxe, which can be sold for $8.35 and $6.35 per bag, respectively. If Green Health is processed further into Premium Green and Green Deluxe, the total gross profit would be:

Multiple Choice

• $102,155.

• $106,755.

• $81,155.

• $104,455.

• $71,155.

Ahngram Corp. has 1,000 defective units of a product that cost $2.30 per unit in direct costs and $5.80 per unit in indirect cost when produced last year. The units can be sold as scrap for $3.30 per unit or reworked at an additional cost of $1.80 and sold at full price of $9.90. The incremental net income (loss) from the choice of reworking the units would be:

Multiple Choice

• $3,300.

• $0.

• ($1,800).

• $8,100.

• $1,800.

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

Answer 2 Part 1) The correct answer is $ 71155 3 4 5 Total Gross Profit sales Revenue - Variable cost fixed cost -joint cost 6 (10000*8.35)+(3300*6.35)- (2.1*10000)- 10000- 2300 7$71155 9 Part 2) 10 The correct answer is $ 8100 11 12 Incremental net income Revenue - rework cost 13 (1000*9.9)-(1000 1.8) 14 $8100 15