Cena Corporation has a joint process that produces three products: P, G, and A.Each product may be sold at split-off or processed further and then sold.Joint-processing costs for a year amount to $25,000.Other relevant data are as follows: $\begin{array}{rlc}
&& \text { Separable } & \
&& \text { Processing } & \
&\text { Sales Value } & \text { Costs after } & \text { Sales Value } \
\text { Product } & \text {at Split-off } & \text { Split-off } & \text { at Completion }\
\text { P } & \$ 32,000 & \$ 5,000 & \$ 40,000 \
\text { G } & 16,500 & 7,500 & 29,000 \
\text { A } & 6,400 & 8,000 & 10,000
\end{array}$ Once product P is produced, processing it further will cause profits to _____.
A)increase by $8,000
B)decrease by $5,000
C)decrease by $8,000
D)increase by $3,000

Question

Cena Corporation has a joint process that produces three products: P, G, and A.Each product may be sold at split-off or processed further and then sold.Joint-processing costs for a year amount to $25,000.Other relevant data are as follows: $\begin{array}{rlc} 
&& \text { Separable } & \
&& \text { Processing } & \
&\text { Sales Value } & \text { Costs after } & \text { Sales Value } \
\text { Product } & \text {at Split-off } & \text { Split-off } & \text { at Completion }\
\text { P } & \$ 32,000 & \$ 5,000 & \$ 40,000 \
\text { G } & 16,500 & 7,500 & 29,000 \
\text { A } & 6,400 & 8,000 & 10,000
\end{array}$ Once product P is produced, processing it further will cause profits to _____.
A)increase by $8,000
B)decrease by $5,000
C)decrease by $8,000
D)increase by $3,000

Quizplus · Accepted Answer

Processing product P further increases its sales value from $32,000 to $40,000, an increase of $8,000. However, this incurs an additional cost of $5,000. Therefore, the net increase in profit is $8,000 - $5,000 = $3,000.

Cena Corporation Has a Joint Process That Produces Three Products