Johanna Nason has a home-based business producing handcrafted candles. She can either make basic soy candles or process them further, adding wax shapes to the candles for a more decorative effect. Due to the added labor involved, she can either produce 100 standard candles in a week or 70 of the more decorative candles. The added cost per candle is $1.20, but each candle will sell for $4.60 more. The profit per standard candle is $2.20. Assuming unlimited demand for either product and no fixed costs, determine whether Johanna should sell the candles as-is or process them further into the more expensive candles.
A.Johanna should sell the candles without further processing.
B.Johanna should process the candles further, due to additional profit per unit of $3.40.
C.Johanna should process the candles further, due to increased total profit of $18 per week.
D.Johanna should process the candles further, due to increased total profit of $172 per week.
I don't get why the answer is (D). To process further we have selling price of $4.2 less $1.2 processing further cost = $3.2
70 x 3.2 = 224
Basic soy candles were 100 x 2.2 = 220 so in the end process further. But this question takes the $2.2 and adds it to the $3.2 x 700. Is it because we have unlimited demand?
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