15-11 - 15-1115-23 (continued)(2) The solution to...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 15-1115-23 (continued)(2) The solution to Requirement 1 shows that $1,500 more profit will beearned by further processing when the selling price of shampoo/conditioner is $16 per unit and sales will be 3,000 units. However, ifthe selling price of shampoo/conditioner is only $15 per unit insteadof $16, profit from further processing will be $3,000 less because ofthe reduction in sales revenue [($16 - $15) x 3,000 units]. In thiscase, further processing will now reduce profit made by selling shampooby $1,500. Thus, shampoo should not be processed further intoshampoo/conditioner if the selling price of shampoo/conditioner is only$15. Of course, if the company reduces the selling price, it may beable to sell more than 3,000 bottles of shampoo/conditioner which wouldaffect the profit. So, the decision of whether to sell or processfurther would depend on how many bottles of shampoo/conditioner the...
View Full Document

This homework help was uploaded on 04/08/2008 for the course ACC 102 taught by Professor Drucker during the Fall '07 term at Coastal Carolina University.

Ask a homework question - tutors are online