Question

Coronado Industries is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $24 and Coronado would sell it for $61. The cost to assemble the product is estimated at $25 per unit and the company believes the market would support a price of $84 on the assembled unit. What decision should Coronado make?

Answer 1

Sell before assembly, the company will be better off by $2 per unit

Step-by-step explanation:

Sell price of the unassembled product: $61

Unit Cost of the unassembled product: $24

Profit of unassembled product: $37

Sell price of the assembled product: $84

Unit Cost of the assembled product: $49 ($24 + $25)

Profit of assembled product: $35