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4 August, 02:35

Ahngram Corp. has 1,000 carton of oranges that cost $10 per carton in direct costs and $16.50 per carton in indirect costs and sold for $30 per carton. The oranges can be processed further into orange juice at an additional cost of $12.50 and sold at a price of $46. The incremental income (loss) from processing the oranges into orange juice would be:

Multiple Choice

A. $30,500.

B. $22,500.

C. $30,500

D. $33,500.

E. $23,500.

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Answers (1)
  1. 4 August, 05:37
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    The correct answer is D that is $33,500

    Explanation:

    The total cost for the oranges = Direct cost + Indirect cost

    = (Number of carton * Rate per carton) + (Number of carton * Rate per carton)

    = (1,000 * $10) + (1,000 * $16.50)

    = $10,000 + $16,500

    = $26,500

    Total Revenue = Number of carton * Selling price

    = 1,000 * $30

    = $30,000

    Profit from oranges = Revenue - Cost

    = $30,000 - $26,500

    = $3,500

    Profit or loss from from processing into the orange juice is computed:

    Total Cost = Number of carton * Price

    = 1,000 * $12.50

    = $12,500

    Revenue = Number of carton * Selling Price

    =1,000 * $46

    = $46,000

    Profit or loss = Revenue - Cost

    = $46,000 - $12,500

    = $33,500

    Therefore, Corporation has a profit of 33,500.
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