Carmike Company can further process Product A to produce Product B. Product A is currently selling for $25 per pound and costs $10 per pound to produce. Product B would sell for $32 per pound and would require an additional cost of $10 per pound to produce. What is the differential cost of producing Product B, and should the company further process Product A into Product B?

Question

Carmike Company can further process Product A to produce Product B.  Product A is currently selling for $25 per pound and costs $10 per pound to produce.  Product B would sell for $32 per pound and would require an additional cost of $10 per pound to produce.  What is the differential cost of producing Product B, and should the company further process Product A into Product B?

A.	$20 per pound, Yes
B.	$20 per pound, No
C.	$10 per pound, Yes
D.	$10 per pound, No

PsyDAG · Answer

A = $25 - $10 = ? Additional to A's $10 per pound cost? B = $32 - $10 - $10 = ? Typo somewhere?