Figure 6-7
Suppose That a Concrete Manufacturer Produces Four Grades

Multiple Choice

Figure 6-7
Suppose that a concrete manufacturer produces four grades of concrete totaling 500,000 cubic yards as follows at a joint cost of £2,000,000: $$\begin{array} { c c c } \text { Grade } & \text { Cubic Yards } & \text { Sales Value } \\\text { A } & 75,000 & £ 375,000 \\\text { B } & 200,000 & 1,200,000 \\\text { C } & 100,000 & 700,000 \\\text { D } & 125,000 & 850,000\end{array}$$
-Refer to Figure 6-7. Grade C can be made into bricks. The final sales value will increase to £900,000. The additional cost to make the bricks is £250,000. Should the concrete be processed into bricks?

A) Sell now.
B) Produce bricks; profits will increase £200,000.
C) Produce bricks; profits will increase £900,000.
D) Produce bricks; profits will increase £450,000.