A company that currently produces final product A is considering stopping processing earlier in the production process and selling the intermediate product on the market. The final product sells for $ per unit, whereas the firm believes it can sell the partially processed intermediate product for $ per unit. The firm sells units per quarter and faces a total finished processing cost of $ per quarter after splitoff.

Should the firm sell the intermediate good or the final good?

The intermediate good, because final good sales decrease profits by $

The final good, because final good sales increase profits by $

The final good, because final good sales increase profits by $

The intermediate good, because final good sales decrease profits by $

A company expects to have sales of $ million this quarter based on its perunit wholesale selling price of $ The firm tries to end each quarter with units of finished inventory in case of large, lastminute orders. At the start of the current quarter, the company has finished units in inventory.

How many units should the firm produce this quarter?

$$

Answer rating: 100% (QA)

Lets analyze the situation for both options Option 1 Sell Intermediate Good 75 per unit Revenue per unit 75 Units sold per quarter 1000 units Total re... View the full answer