Hamster food product called green health

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Reference no: EM131354027

Maxim manufactures a hamster food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $2.50 and total fixed costs are $10,000. The hamster food can be sold as it is for $9.75 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,700 cost. The additional processing will yield 10,000 bags of Premium Green and 3,700 bags of Green Deluxe, which can be sold for $8.75 and $6.75 per bag, respectively. The net advantage (incremental income) of processing Green Health further into Premium Green and Green Deluxe would be:

A) $112,475.

B) $109,775.

C) $14,975.

D) $12,275.

E) $2,700.

Reference no: EM131354027

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