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Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for $30 per pound and costs $28 per pound to produce. Product C would sell for $55 per pound and would require an additional cost of $31 per pound to produce. What is the differential cost of producing Product C? A. $28 per pound B. $55 per pound C. $31 per pound D. $30 per pound

Question

Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for 30perpoundandcosts30 per pound and costs 28 per pound to produce. Product C would sell for 55perpoundandwouldrequireanadditionalcostof55 per pound and would require an additional cost of 31 per pound to produce. What is the differential cost of producing Product C? A. 28perpoundB.28 per pound B. 55 per pound C. 31perpoundD.31 per pound D. 30 per pound

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Solution

The differential cost of producing Product C is the difference between the cost of producing Product C and the cost of producing Product B.

First, let's calculate the cost of producing Product C. It is given that an additional cost of 31perpoundisrequiredtoproduceProductC.SinceProductBalreadycosts31 per pound is required to produce Product C. Since Product B already costs 28 per pound to produce, the total cost of producing Product C is 28+28 + 31 = $59 per pound.

The cost of producing Product B is given as $28 per pound.

So, the differential cost is 59(costofproducingProductC)59 (cost of producing Product C) - 28 (cost of producing Product B) = $31 per pound.

Therefore, the answer is C. $31 per pound.

This problem has been solved

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