Final answer:
The incremental income from processing Graham Corporation's oranges into orange juice, after accounting for additional costs and subtracting the income from selling the oranges as is, would be $3,545.
Step-by-step explanation:
The question revolves around making a decision based on incremental analysis for Graham Corporation regarding whether to sell its oranges as they are or process them into orange juice. We are given that the cost of the oranges is $28,200 and if sold as is, they would bring in $32,880. However, if processed further into orange juice, there would be an additional cost of $12,725, and the juice would sell for $49,150. To find the incremental income or loss from processing, we subtract the total cost of production (initial cost plus additional cost) from the selling price of the processed goods.
To calculate: ($49,150 from juice sales) - ($28,200 initial cost + $12,725 additional cost) = $8,225. This is the income from processing the oranges into juice. We then compare it to the income from selling the oranges as is, which is ($32,880 from orange sales) - ($28,200 initial cost) = $4,680. To find the incremental income (loss), subtract the income from selling as is from the income from processing, resulting in: $8,225 - $4,680 = $3,545. Therefore, the incremental income from processing the oranges into orange juice would be $3,545.