The projected selling price for cotton is $0.95 per pound. Fixed costs are budgeted to be...
The projected selling price for cotton is $0.95 per pound. Fixed costs are budgeted to be $0.25 per pound, and variable costs are budgeted to be $0.80 per pound. What is your profit (loss) if you decide to produce cotton and should you produce cotton? a. $0.10 loss per pound; you should not produce. b. $0.10 loss per pound; you should produce. c. $0.15 profit per pound; you should produce. d. $0.15 loss per pound; you should not produce.
Homework Answers
Profit/Loss = Sales - Variable Costs - Fixed Costs = $0.95 - $0.80 - $0.25 = -$0.10
As the production of cotton result into loss of $10 per pound, you should not produce.
Hence, Option "Ä" is correct.
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The projected selling price for cotton is $0.95 per pound. Fixed
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