A chemical company spent $530,000 to produce 152,000 gallons of a chemical that can be sold for $4.80 per gallon. This chemical can be further processed into a weed killer that can be sold for $8.20 per gallon. It will cost $270,000 to proces the chemical into the weed killer. Which of the following is true? O A. If the company decides to process further, it will decrease operating income by $1,246,400. O B. If the company decides to process further, it will increase operating income by $246,800. Oc. To maximize operating income, the company should continue to sell the chemical as is. O D. If the company decides to process further, it will increase operating income by $446,400.
A chemical company spent $530,000 to produce 152,000 gallons of a chemical that can be sold for $4.80 per gallon. This chemical can be further processed into a weed killer that can be sold for $8.20 per gallon. It will cost $270,000 to proces the chemical into the weed killer. Which of the following is true? O A. If the company decides to process further, it will decrease operating income by $1,246,400. O B. If the company decides to process further, it will increase operating income by $246,800. Oc. To maximize operating income, the company should continue to sell the chemical as is. O D. If the company decides to process further, it will increase operating income by $446,400.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A chemical company spent $530,000 to produce 152,000 gallons of a chemical that can be sold for $4.80 per gallon. This chemical can be further processed into a weed killer that can be sold for $8.20 per gallon. It will cost $270,000 to process
the chemical into the weed killer. Which of the following is true?
....
O A. If the company decides to process further, it will decrease operating income by $1,246,400.
O B. If the company decides to process further, it will increase operating income by $246,800.
OC. To maximize operating income, the company should continue to sell the chemical as is.
O D. If the company decides to process further, it will increase operating income by $446,400.
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