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FINANCIAL ACCOUNTING
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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A joint production process at Specialty Jams Farm results in two products, cherry jelly and cherry jam. The following cost and activity data relate to these two products: Cherry jelly $10,000 Cherry jam $12,000 Joint costs allocated Number of units produced from joint process 2300 2300 Selling price at split-off point Selling price after processing further $2.70 $5.00 $1.75 $2.00 Cost of processing further $2300 $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? Selected Answer: Answers: $2990 net increase in operating income $6210 net decrease in operating income $6210 net increase in operating income $2990 net decrease in operating income
Transcribed Image Text:A joint production process at Specialty Jams Farm results in two products, cherry jelly and cherry jam. The following cost and activity data relate to these two products: Cherry jelly $10,000 Cherry jam $12,000 Joint costs allocated Number of units produced from joint process 2300 2300 Selling price at split-off point Selling price after processing further $2.70 $5.00 $1.75 $2.00 Cost of processing further $2300 $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? Selected Answer: Answers: $2990 net increase in operating income $6210 net decrease in operating income $6210 net increase in operating income $2990 net decrease in operating income
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