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2 March, 01:35

It costs Glenwood, Inc. $82 per unit to manufacture 1,000 units per month of a product that it can sell for $122 each. Alternatively, Glenwood could process the units further into a more complex product, which would cost an additional $36 per unit. Glenwood could sell the more complex product for $162 each. How would processing the product further affect Glenwood's profit?

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  1. 2 March, 02:51
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    Answer:The profit would increase by $ 4000 if complex product was produced.

    Explanation:

    Total number of units to be manufactured = 1000

    (i) The cost price of 1 unit = $ 82

    The cost price of 1000 units = 82 * 1000 = $ 82000

    Selling price of 1 unit = $ 122

    The selling price of 1000 units = 122 * 1000 = $ 122000

    Profit earned = 122000 - 82000 = $ 40000

    (ii) To produce a complex product,

    The cost price of 1 unit = $ 82 + $ 36 = $ 118

    The cost price of 1000 units = 118 * 1000 = $ 118000

    Selling price of 1 unit = $ 162

    The selling price of 1000 units = 162 * 1000 = $ 162000

    Profiy earned = 162000 - 118000 = $ 44000

    Therefore, the profit would increase by $ 4000 if complex product was produced.
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