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Two Different Products Are Being Considered for Production

question 7

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Two different products are being considered for production. The cost structures are listed below on a per unit basis. Which product should be produced, using revenue retrieval analysis?
 Product Blue  Resale Revenue  Recycling  Revenue  Processing Cost  Disposal Cost  Part A $4.25$3.81$1.26$2.48 Part B $5.78$3.84$2.11$1.07 Part C $2.63$0.87$0.92$0\begin{array} { | l | l | l | l | l | } \hline \text { Product Blue } & \text { Resale Revenue } & \begin{array} { l } \text { Recycling } \\\text { Revenue }\end{array} & \text { Processing Cost } & \text { Disposal Cost } \\\hline \text { Part A } & \$ 4.25 & \$ 3.81 & \$ 1.26 & \$ 2.48 \\\hline \text { Part B } & \$ 5.78 & \$ 3.84 & \$ 2.11 & \$ 1.07 \\\hline \text { Part C } & \$ 2.63 & \$ 0.87 & \$ 0.92 & \$ 0 \\\hline\end{array}  Product  Recycling  Yellow  Resale Revenue  Revenue  Processing Cost  Disposal Cost  Part A $9.84$6.54$2.16$0.88 Part B $7.14$5.45$3.48$0.97 Part C $0.85$0.69$0.16$0.31\begin{array} {| l | l | l | l | l | } \hline \text { Product } & & \text { Recycling } & & \\\text { Yellow } & \text { Resale Revenue } & \text { Revenue } & \text { Processing Cost } & \text { Disposal Cost } \\\hline \text { Part A } & \$ 9.84 & \$ 6.54 & \$ 2.16 & \$ 0.88 \\\hline \text { Part B } & \$ 7.14 & \$ 5.45 & \$ 3.48 & \$ 0.97 \\\hline \text { Part C } & \$ 0.85 & \$ 0.69 & \$ 0.16 & \$ 0.31 \\\hline\end{array}

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Definitions:

Retained Earnings

The portion of net profits that are kept in the company rather than distributed to shareholders as dividends, often used for reinvestment in the business.

Legal Capital

is the portion of a company's equity that cannot legally be distributed to shareholders and is meant to protect creditors.

Cash Dividends

Cash distributions from a corporation to its shareholders, representing the profit share paid out.

Shares Reacquired

Securities that were previously sold to the public and then bought back by the issuing company.

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