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18 April, 03:35

It costs Mills, Inc. $12 per unit to manufacture 2,000 units per month of a product that it can sell for $36 each. Alternatively, Mills could process the units further into a more complex product, which would cost an additional $22 per unit. Mills could sell the more complex product for $57 each. How would processing the product further affect Mills' profit.

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  1. 18 April, 07:28
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    It is more convenient to sell before continue processing.

    Explanation:

    Giving the following information:

    It costs Mills, Inc. $12 per unit to manufacture 2,000 units per month of a product that it can sell for $36 each. Alternatively, Mills could process the units further into a more complex product, which would cost an additional $22 per unit. Mills could sell the more complex product for $57 each.

    Pre processing contribution margin = 36 - 12 = 24

    Post processing CM = 57 - 34 = $23

    It is more convenient to sell before continue processing.
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