Some Co. can further process Product J to produce Product D. Product J is currently selling for $24.00 per pound and costs $15.00 per pound to produce. Product D would sell for $36.00 per pound and would require an additional cost of $10.00 per pound to produce.
Determine the differential cost of producing Product D.
Select the correct answer.
Solution
Opportunity Cost for producing product D using product J, i.e. foregoing the sale of product J = $24
Additional Cost to produce product D = $10
Differential Cost of producing Poduct D = 24-10 = $14
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Some Co- can further process Product J to produce Product D- Product J.docx
1. Some Co. can further process Product J to produce Product D. Product J is currently selling for
$24.00 per pound and costs $15.00 per pound to produce. Product D would sell for $36.00 per
pound and would require an additional cost of $10.00 per pound to produce.
Determine the differential cost of producing Product D.
Select the correct answer.
$14.00 per pound
$12.00 per pound
$10.00 per pound
$26.00 per pound
Solution
Opportunity Cost for producing product D using product J, i.e. foregoing the sale of product J =
$24
Additional Cost to produce product D = $10
Differential Cost of producing Poduct D = 24-10 = $14
