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25 November, 20:44

NF Toy Company is unsure of whether to sell its product assembled or unassembled.

The unit cost of the unassembled product is $24 and NF Toy would sell it for $52.

The cost to assemble the product is estimated at $17 per unit and the company believes the market would support a price of $68 on the assembled unit.

What decision should NF Toy make?

a. Sell before assembly, the company will be better off by $1 per unit.

b. Sell before assembly, the company will be better off by $16 per unit.

c. Process further, the company will be better off by $23 per unit.

d. Process further, the company will be better off by $11 per unit.

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Answers (1)
  1. 25 November, 20:51
    0
    Option A is correct.

    Hence, sell before assembly, the company will be better off by $1 per unit.

    Explanation:

    Un-assembled product:

    Cost = 24

    Selling price = 52

    Profit = 52-24 = 28

    Assembled product:

    Cost = 24+17 = 41

    Selling price = 68

    Profit = 68-41 = 27
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