Davis Naturals manufactures bulk quantities of cleaning fluids
It currently sells 1,000 containers a month at a sales price of $18 per unit. If a new fragrance is added, $20 per unit could be charged for the improved product. It would cost a total of $900 per month to make that alteration. Operating income would ________.
A) decline by $2,000
B) increase by $2,000
C) increase by $1,100
D) decline by $900
C .C)
Sell as is Process further
Sales revenue $18,000 $20,000
Less: Additional cost 900
Operating income $18,000 $19,100
Operating income will improve by $1,100 ($19,100 - $18,000 ) if it's further processed.
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