Question

Maxim manufactures a hamster food product called Green Health. Maxim currently has 19,000 bags of Green Health on hand. The variable production costs per bag are $3.20 and total fixed costs are $24,000. The hamster food can be sold as it is for $11.00 per bag or be processed further into Premium Green and Green Deluxe at an additional cost. The additional processing will yield 19,000 bags of Premium Green and 4400 bags of Green Deluxe, which can be sold for $10 and $8 per bag, respectively. Assuming Maxim further processes Green Health further into Premium Green and Green Deluxe, revenue from the two products would be:

Answer 1

$225,200

Step-by-step explanation:

Revenue from the two products would be:

= Green health + Hamster food

= (Unit sales × selling price per unit) + (Unit sales × selling price per unit)

= (19,000 × $10) + (4,400 × $8)

= $190,000 + $35,200

= $225,200

Therefore, Assuming Maxim further processes Green Health further into Premium Green and Green Deluxe, revenue from the two products would be $225,200.