The Wyeth Corporation produces three products, A, B, and C, from a single rawmaterial input. Product A can be sold at the splitoff point for $40,000, or it can beprocessed further at a total cost of $15,000 and then sold for $58,000. Joint coststotal $60,000 annually. Product A should be:Multiple Choicediscontinued because revenues after further processingare less than total joint costs.sold at the split-off point.processed further and then sold.processed further only if its share of the total joint costs isless than the incremental revenues from furtherprocessing.

The correct answer is: (C) Processed further and then sold The decision to process product A…

The Wyeth Corporation produces three products, A, B, and C, from a single raw material input. Product A can be sold at the splitoff point for $40,000, or it can be processed further at a total cost of $15,000 and then sold for $58,000. Joint costs total $60,000 annually. Product A should be:

The Wyeth Corporation produces three products, A, B, and C, from a single raw material input. Product A can be sold at the splitoff point for $40,000, or it can be processed further at a total cost of $15,000 and then sold for $58,000. Joint costs total $60,000 annually. Product A should be:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The Wyeth Corporation produces three products, A, B, and C, from a single raw
material input. Product A can be sold at the splitoff point for $40,000, or it can be
processed further at a total cost of $15,000 and then sold for $58,000. Joint costs
total $60,000 annually. Product A should be:
Multiple Choice
discontinued because revenues after further processing
are less than total joint costs.
sold at the split-off point.
processed further and then sold.
processed further only if its share of the total joint costs is
less than the incremental revenues from further
processing.

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