Listmann Corp. processes four different products that can either be sold as is or processed further. Listed below are sales and additional cost dа ta:

Product Sales Value without Processing Additional Costs Sales Value after processing

Premier $1,350 $900 $2,700

Deluxe 450 225 630

Super 900 450 1,800

Basic 90 45 180

Which product (s) should not be processed further?

Question

Business

Lorenzo Walters

22 March, 00:28

Listmann Corp. processes four different products that can either be sold as is or processed further. Listed below are sales and additional cost dа ta:

Product Sales Value without Processing Additional Costs Sales Value after processing

Premier $1,350 $900 $2,700

Deluxe 450 225 630

Super 900 450 1,800

Basic 90 45 180

Which product (s) should not be processed further?

+4

Answers (1)

Know the Answer?

Kamora Hopkins · Answer 1

The product Deluxe sgould not be processed further.

Explanation:

Giving the following information:

Sales - Value without Processing - Additional Costs - Sales Value after processing

Premier: $1,350 - $900 - $2,700

Deluxe: 450 - 225 - 630

Super: 900 - 450 - 1,800

Basic: 90 - 45 - 180

We need to calculate the contribution margin of each product before and after processing.

Premier:

Before = 1,350

After = 2,700 - 900 = $1,800

It is more profitable to continue processing.

Deluxe:

Before = 450

After = 630 - 225 = $405

It is more profitable to sell before processing.

Super:

Before = 900

After = 1,800 - 450 = $1,350

It is more profitable to continue processing.

Basic:

Before = 90

After = 180 - 45 = 135

It is more profitable to continue processing.