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Carrot Company processes carrots that it can sell as is for $2,000, or it can process these carrots further and produce jarred baby food which will result in revenues of $5,000. If they process further, it will cost them an additional $1,500. Incremental income to process further is

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Answer:

$1500

Explanation:

chilljain33

Incremental income that the carrot company has gained is $1500

as the proceeds were obtained by adding additional $1500.

Carrot company had the option to stay at a sales of $2000 but they chose to produce jarred baby food which gave them a whopping revenue jump of $5000.

  • Incremental income is derived from the following formula

    sales done - capital employed

     i.e. 5000 - 3500 = 1500

  • By spending additional $1500, it was able to generate an additional income of upto $3000, which made their incremental income up to 3000-1500 = 1500.

Hence the incremental income is $1500 as derived by the formula above.

To know more about income , refer link below.

https://brainly.com/question/17961582

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