A joint production process at the Company results in two products, cherry jelly and cherry jam. The following cost and activity data relate to these two products: Cherry jelly Cherry jam Joint costs allocated $10,000 $12,000 Number of units produced from joint process 2100 2100 Selling price at split-off point $2.70 $1.75 Selling price after processing further $5.00 $2.00 Cost of processing further $2400 $2,000 Cherry jelly can be sold as-is (at the split-off point) for $2.70 per unit, or it can be processed further into a specialty cherry smoothie and then sold for $5.00 per unit. If cherry jelly is processed further into the specialty cherry smoothie, what would be the overall effect on operating income? $2430 net increase in operating income $2430 net decrease in operating income $5670 net increase in operating income $5670 net decrease in operating income
A joint production process at the Company results in two products, cherry jelly and cherry jam. The following cost and activity data relate to these two products: Cherry jelly Cherry jam Joint costs allocated $10,000 $12,000 Number of units produced from joint process 2100 2100 Selling price at split-off point $2.70 $1.75 Selling price after processing further $5.00 $2.00 Cost of processing further $2400 $2,000 Cherry jelly can be sold as-is (at the split-off point) for $2.70 per unit, or it can be processed further into a specialty cherry smoothie and then sold for $5.00 per unit. If cherry jelly is processed further into the specialty cherry smoothie, what would be the overall effect on operating income? $2430 net increase in operating income $2430 net decrease in operating income $5670 net increase in operating income $5670 net decrease in operating income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A joint production process at the Company results in two products, cherry jelly and cherry jam. The following cost and activity data relate to these two products: Cherry jelly Cherry jam Joint costs allocated $10,000 $12,000 Number of units produced from joint process 2100 2100 Selling price at split-off point $2.70 $1.75 Selling price after processing further $5.00 $2.00 Cost of processing further $2400 $2,000 Cherry jelly can be sold as-is (at the split-off point) for $2.70 per unit, or it can be processed further into a specialty cherry smoothie and then sold for $5.00 per unit. If cherry jelly is processed further into the specialty cherry smoothie, what would be the overall effect on operating income? $2430 net increase in operating income $2430 net decrease in operating income $5670 net increase in operating income $5670 net decrease in operating income
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