Whiteville Co can further process Product B to produce Produ

Whiteville Co. can further process Product B to produce Product C. Product B is currently selling for $45 per pound and costs $30 per pound to produce. Product C would sell for $80 per pound and would require an additional cost of $18 per pound to produce.

Determine the differential cost of producing Product C.

Solution

Calculation of Differential Cost

Differential cost is nothing but difference between the cost of two alternatives options or situation.

Here differential cost of producing Product C is additional cost of of producing C in further procrssing,ie $18 per pound