Reference no: EM132621761

Question - Jonathan Corporation makes an unassembled chair that sells for $23. Product costs are $6 per chair. Lois, the product line manager, suggests that Jonathan Corp. should instead sell an assembled chair, as revenues will be higher.

The market price for the assembled chair would be $30. The cost of additional assembly is $8.

If Jonathan Corporation adopts a financial perspective, which of the following is true?

Jonathan will sell the assembled chair because revenues are higher by $7 per chair.

Jonathan will not sell the assembled chair because the incremental revenues are less than the incremental costs by $1.

Jonathan will not sell the assembled chair because product costs are $14 per chair.

Jonathan will sell the assembled chair because profits increase by $7 per chair.