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Coronado Industries is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $24 and Coronado would sell it for $61. The cost to assemble the product is estimated at $25 per unit and the company believes the market would support a price of $84 on the assembled unit. What decision should Coronado make?

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Answer:

Sell before assembly, the company will be better off by $2 per unit

Explanation:

Sell price of the unassembled product:  $61

Unit Cost of the unassembled product:  $24

Profit of unassembled product:                $37

Sell price of the assembled product:       $84

Unit Cost of the assembled product:       $49   ($24 + $25)

Profit of assembled product:                    $35

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