Question
A company has the choice of either selling 600 apples or processing them into applesauce. The company could sell the apples as is for $1,200.
A company has the choice of either selling 600 apples or processing them into applesauce. The company could sell the apples as is for $1,200. Alternatively, the apples could be made into applesauce with incremental costs that consist of $360 of direct materials, $600 of direct labor, and $480 of overhead. The applesauce can be sold for $3,000. What is the amount of incremental cost from processing the apples into applesauce?
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The incremental cost from processing the apples into applesauce is $360 (direct materials) + $600 (direct labor) + $480 (overhead) = $1440.
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