Delite Confectionary Company produces various types of candies. Several candies could be sold at the split-off point or processed further and sold in a different form after further processing. The candies are produced in a joint processing operation with $500,000 of joint processing costs monthly, which are allocated based on pounds produced. Information concerning this process for a recent month appears below:

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The net advantage (disadvantage) of processing Sweet Meats further is:
A) a $25,000 disadvantage to process further.
B) a $32,143 advantage to process further.
C) a $25,000 advantage to process further.
D) a $282,143 disadvantage to process further.

Question

Delite Confectionary Company produces various types of candies. Several candies could be sold at the split-off point or processed further and sold in a different form after further processing. The candies are produced in a joint processing operation with $500,000 of joint processing costs monthly, which are allocated based on pounds produced. Information concerning this process for a recent month appears below:

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The net advantage (disadvantage) of processing Sweet Meats further is:

-
The net advantage (disadvantage) of processing Sweet Meats further is:
A) a $25,000 disadvantage to process further. 
B) a $32,143 advantage to process further. 
C) a $25,000 advantage to process further. 
D) a $282,143 disadvantage to process further.

Quizplus · Accepted Answer

The net advantage of processing further is calculated by comparing the additional revenue from processing further with the additional costs incurred. If the additional revenue exceeds the additional costs by $25,000, then it is a $25,000 advantage to process further.

Delite Confectionary Company Produces Various Types of Candies