Question

Coronado Industries produces face cream. Each bottle of face cream costs $11 to produce and can be sold for $15. The bottles can be sold as is, or processed further into sunscreen with an additional cost of $16 each. Coronado Industries could sell the sunscreen bottles for $21 each.

A. Face cream must be processed further because it increases profit by $3 each.B. Face cream must be processed further because its profit is $9 each.C. Face cream must not be processed further because costs increase more than revenue.D. Face cream must not be processed further because it decreases profit by $1 each.

Answer 1

c

Step-by-step explanation:

Profit = Total revenue - cost

Profit if bottle is sold as face cream = $15 - $11 = $4

Profit is bottle is sold as sunscreen = $21 - ($16 + $11) = $-6

Processing the bottle further into sunscreen increases costs more than revenue and thus should not be processed further