Bozo Inc. manufactures two products from a joint production process. The joint process costs $110,000 and yields 6,000 pounds of LTE compound and 14,000 pounds of HS compound. LTE can be sold at split-off for $55 per pound. HS can be sold at split-off for $9 per pound. A buyer of HS asked Bozo to process HS further into CS compound. If HS were processed further, it would cost $37,400 to turn 14,000 pounds of HS into 4,000 pounds of CS. The CS would sell for $56 per pound. 1. What is the contribution to income from selling the 14,000 pounds of HS at split-off? 2. Conceptual Connection: What is the contribution to income from processing the 14,000 pounds of HS into 4,000 pounds of CS?
Bozo Inc. manufactures two products from a joint production process. The joint process costs $110,000 and yields 6,000 pounds of LTE compound and 14,000 pounds of HS compound. LTE can be sold at split-off for $55 per pound. HS can be sold at split-off for $9 per pound. A buyer of HS asked Bozo to process HS further into CS compound. If HS were processed further, it would cost $37,400 to turn 14,000 pounds of HS into 4,000 pounds of CS. The CS would sell for $56 per pound. 1. What is the contribution to income from selling the 14,000 pounds of HS at split-off? 2. Conceptual Connection: What is the contribution to income from processing the 14,000 pounds of HS into 4,000 pounds of CS?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Bozo Inc. manufactures two products from a joint
production process.
The joint process costs $110,000 and yields 6,000
pounds of LTE compound and 14,000 pounds of HS
compound.
LTE can be sold at split-off for $55 per pound.
HS can be sold at split-off for $9 per pound.
A buyer of HS asked Bozo to process HS further into
CS compound. If HS were processed further, it
would cost $37,400 to turn 14,000 pounds of HS into
4,000 pounds of CS. The CS would sell for $56 per
pound.
1. What is the contribution to income from selling
the 14,000 pounds of HS at split-off?
2. Conceptual Connection: What is the contribution
to income from processing the 14,000 pounds of HS
into 4,000 pounds of CS?
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