Spurrier Corporation Produces Two Intermediate Products,A and B,from a Common

question 118

Essay

Spurrier Corporation produces two intermediate products,A and B,from a common input.Intermediate product A can be further processed into end product X.Intermediate product B can be further processed into end product Y.The common input is purchased in batches that cost $50 each and the cost of processing a batch to produce intermediate products A and B is $15.Intermediate product A can be sold as is for $28 or processed further for $18 to make end product X that is sold for $43.Intermediate product B can be sold as is for $31 or processed further for $24 to make end product Y that is sold for $68.
Required:
a.Assuming that no other costs are involved in processing potatoes or in selling products,how much money does the company make from processing one batch of the common input into the end products X and Y? Show your work!
b.Should each of the intermediate products,A and B,be sold as is or processed further into an end product? Explain.

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Definitions:

Experimental Statistical Study

A research method involving the manipulation of one variable to determine if changes in one variable cause changes in another variable.

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An infectious disease caused by the bacterium Vibrio cholerae, leading to severe diarrhea and dehydration.

Polio

A viral disease that can affect nerves and lead to partial or full paralysis, largely eradicated in many countries through vaccination.

Diphtheria

A bacterial infection causing a thick covering in the back of the throat, which can lead to breathing difficulties, heart failure, paralysis, or death.