Belize Corporation has a joint process which produces three products: X, Y, and Z. Each product may be sold at split- off or processed further and then sold. Joint processing costs for a year amount to $100,000. Other relevant data are as follows: $\begin{array}{llll}
&&\text { Separable }\&&\text { Processing }\
& \text { Sales V alue at } & \text { Costs after } & \text { Sales Value at } \
\text { Product } & \text { Split- off } & \underline{\text { Split-off }} & \text { Completion }\
X & \$ 128,000 & \$ 16,000 & \$ 160,000 \
Y & 50,000 & 26,000 & 76,000 \
Z & 25,600 & 20,000 & 40,000
\end{array}$ In processing Product Z further:
A) profits will decrease by $5,600
B) profits will increase by $20,000
C) incremental profits will exceed incremental costs
D) the additional revenue produced will exceed the additional costs

Question

Quizplus · Accepted Answer

The additional revenue from processing Product Z further is $14,400 ($40,000 - $25,600), while the additional costs are $20,000. Therefore, profits will decrease by $5,600 ($14,400 - $20,000).

Belize Corporation Has a Joint Process Which Produces Three Products