Question

Bonita Industries produces face cream. Each bottle of face cream costs $11 to produce and can be sold for $15. The bottles can be sold as is, or processed further into sunscreen with an additional cost of $16 each. Bonita Industries could sell the sunscreen bottles for $26 each. A Face cream must be processed further because it increases profit by $3 each.




B Face cream must be processed further because its profit is $9 each.




C Face cream must not be processed further because costs increase more than revenue.




D Face cream must not be processed further because it decreases profit by $1 each.

Answer 1

Answer:C. Face cream must not be processed further because cost increase more than revenue.

Explanation:

The bottle of face cream cost $11 to the firm at a sales price of $15 bringing in a profit of $4, however if the firm decided to process the cream bottle further into sunscreen it will incur additional cost of $16 which brings the total cost to $27 and it can only be sold for $26 which brings a loss of $1 invariably cost is greater than revenue.