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Processing costs to refine the basic compound

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Reference no: EM13130467

Sell or process further? National Chemical Company manufactures a chemical compound that is sold for $58.00 per gallon. A new variant of the chemical has been discovered and if the basic compound were processed into the new variant, the selling price would be $72.00 per gallon. National expects the market for the new compound variant to be 57,000 gallons initially and determines that processing costs to refine the basic compound into the variant would be $72,800.

Required:

Should National produce the new compound variant? Explain your answer.

Reference no: EM13130467

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