Question

Pottery, Inc crafts local pottery.

The cost of getting the pottery ready for market is about $20 per pound of clay.   

Each pound of clay produces 4 unglazed pieces of art that sells for $8 per piece.

Pottery, Inc can glaze the clay for an additional $7. The glazed art will still produce 4 pieces of art that sells for $11 per piece.

By how much will Pottery's income change if they glaze 30 pounds of clay (label as an increase or decrease) as opposed to selling them unglazed?

a.

$510 decrease

b.

$510 increase

c.

$150 increase

d.

$1320 increase

e.

none of the above

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Answer #1
Incremental Revenue in Glazing Per Pound 12.00 (11-8)*4
Less: Incremental Cost in Glazing Per Pound 7.00
Incremental Income in Glazing Per Pound 5.00
Total Clay Qty 30.00
Increase in Income 150.00
Answer is C
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