Question

It costs Mills, Inc. $12 per unit to manufacture 2,000 units per month of a product that it can sell for $36 each. Alternatively, Mills could process the units further into a more complex product, which would cost an additional $22 per unit. Mills could sell the more complex product for $57 each. How would processing the product further affect Mills' profit.

Answer 1

It is more convenient to sell before continue processing.

Step-by-step explanation:

Giving the following information:

It costs Mills, Inc. $12 per unit to manufacture 2,000 units per month of a product that it can sell for $36 each. Alternatively, Mills could process the units further into a more complex product, which would cost an additional $22 per unit. Mills could sell the more complex product for $57 each.

Pre processing contribution margin= 36 - 12= 24

Post processing CM= 57 - 34= $23

It is more convenient to sell before continue processing.