(LO 8) Maxim manufactures a hamster food product called Green Health. Maxim currently has 18,500 bags of Green Health on hand. The variable production costs per bag are $3.50 and total fixed costs are $27,000. The hamster food can be sold as it is for $10.00 per bag or be processed further into Premium Green and Green Deluxe at an additional cost. The additional processing will yield 18,500 bags of Premium Green and 4,700 bags of Green Deluxe, which can be sold for $9 and $7 per bag, respectively. Assuming Maxim further processes Green Health further into Premium Green and Green Deluxe, revenue from the two products would be:

$ 199,400

Explanation:

Calculation for what the revenue from the two products would be:

VENUE IF PROCESSED FURTHER:

Premium Green $166,500

(18,500 bags * $9 per bag)

Green Deluxe

(4,700 bags * $7 per bag) $32,900

Total revenue if processed further $ 199,400

Therefore Assuming Maxim further processes Green Health further into Premium Green and Green Deluxe what the revenue from the two products would be is $ 199,400

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