Cancun 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: $\begin{array}{llll}
&&\text { Separable }\&&\text { Processing }\
\text { Product } & \begin{array}{l}
\text { Sales Value at } \
\text { Split-off }
\end{array} & \begin{array}{l}
\text { Costs after } \
\text { Split-off }
\end{array} & \begin{array}{l}
\text { Sales Value at } \
\text { Completion }
\end{array}\
\mathrm{X} & \$ 128,000 & \$ 16,000 & \$ 160,000 \
\mathrm{Y} & 75,000 & 26,000 & 99,000 \
\mathrm{Z} & 32,600 & 20,000 & 50,000
\end{array}$ Once product X is produced, processing it further will cause profits to:
A) decrease by $16,000
B) increase by $16,000
C) decrease by $32,000
D) increase by $32,000

Question

Quizplus · Accepted Answer

Processing product X further will increase profits by $16,000 ($160,000 - $128,000 - $16,000).

Cancun Corporation Has a Joint Process Which Produces Three Products