Corporation produces two intermediate products, A and B, from a common input. Intermediate product A...
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Corporation produces two intermediate products, A and B, from a common input. Intermediate product A can be further processed into Product X. Intermediate product B can be further processed into Product Y. The common input is purchased in batches that cost $42 each and the cost of processing a batch to produce intermediate products A and B is $18. Intermediate product A can be sold as is for $21 or processed further for $14 to make Product X that is sold for $37. Intermediate product B can be sold as is for $44 or processed further for $28 to make Product Y that is sold for $64.
A) What is the incremental profit (loss) for processing one batch from Product A to Product X?
B) What is the incremental profit (loss) for processing one batch from Product B to Product Y?
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