Products A,B,and C Are Produced from a Single Raw Material

question 26

Multiple Choice

Products A,B,and C are produced from a single raw material input.The raw material costs are $90,000,from which 5,000 units of A,10,000 units of B,and 15,000 units of C can be produced each period.Product A can be sold at the split-off point for $2 per unit,or it can be processed further at a cost of $12,500 and then sold for $5 per unit.What is the correct course of action regarding Product A?

• A) It should be sold at the split-off point, since further processing would result in a loss of $0.50 per unit.
• B) It should be processed further, since this will increase profits by $2,500 each period.
• C) It should be sold at the split-off point, since further processing will result in a loss of $2,500 each period.
• D) It should be processed further, since this will increase profits by $12,500 each period.

Evaluating the trade-offs between efficiency and equity in resource allocation.

Comprehending the concept of opportunity cost and its role in decision-making.

Understanding the rationale for individuals allowing for leisure in their schedules.

Applying marginal analysis to make business decisions.

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Definitions:

Acculturation

The process through which people adopt cultural traits or social patterns of another group, often occurring in immigrant populations.

Organizational Citizenship Behavior

Voluntary actions performed by employees that contribute to the overall culture and performance of an organization, beyond their specific job duties.

Career

A career is the set of experiences and activities that people engage in related to their job and livelihood over the course of their working life.

Disengagement Stage

The phase in a process, especially related to career or life stages, where an individual gradually lessens their involvement or participation.