Technical Chemical manufactures two products as part of a joint process: MB and EB. Joint costs up to the split-off point total $70,000, and are allocated to each line of product in proportion to its relative sales value. At the split-off point, product MB can be sold for $85,000, and EB can be sold for $25,000. At an incremental cost of $30,000, MB can be processed into MB-2 and sold for $105,000. At an incremental cost of $25,000, EB can be processed into EB-2 and sold for $62,500.
a) Joint costs allocated to product MB total (round your percentage calculations to a whole number): $____________
b) Joint costs allocated to product EB total (round your percentage calculations to a whole number): $____________
c) The net change in operating income resulting from a decision to manufacture MB-2 is (specify whether the change is an increase or a decrease): $____________
d) The net change in operating income resulting from a decision to manufacture EB-2 is (specify whether the change is an increase or a decrease): $____________
e) The net change in operating income resulting from a decision to manufacture both MB-2 and EB-2 is (specify whether the change is an increase or a decrease): $____________

Question

Technical Chemical manufactures two products as part of a joint process: MB and EB. Joint costs up to the split-off point total $70,000, and are allocated to each line of product in proportion to its relative sales value. At the split-off point, product MB can be sold for $85,000, and EB can be sold for $25,000. At an incremental cost of $30,000, MB can be processed into MB-2 and sold for $105,000. At an incremental cost of $25,000, EB can be processed into EB-2 and sold for $62,500.
 a) Joint costs allocated to product MB total (round your percentage calculations to a whole number): $____________
 b) Joint costs allocated to product EB total (round your percentage calculations to a whole number): $____________
 c) The net change in operating income resulting from a decision to manufacture MB-2 is (specify whether the change is an increase or a decrease): $____________
 d) The net change in operating income resulting from a decision to manufacture EB-2 is (specify whether the change is an increase or a decrease): $____________
 e) The net change in operating income resulting from a decision to manufacture both MB-2 and EB-2 is (specify whether the change is an increase or a decrease): $____________

Quizplus · Accepted Answer

The Answer of Technical Chemical manufactures two products as part of a joint process: MB and EB. Joint costs up to the split-off point total $70,000, and are allocated to each line of product in proportion to its relative sales value. At the split-off point, product MB can be sold for $85,000, and EB can be sold for $25,000. At an incremental cost of $30,000, MB can be processed into MB-2 and sold for $105,000. At an incremental cost of $25,000, EB can be processed into EB-2 and sold for $62,500.
 a) Joint costs allocated to product MB total (round your percentage calculations to a whole number): $____________
 b) Joint costs allocated to product EB total (round your percentage calculations to a whole number): $____________
 c) The net change in operating income resulting from a decision to manufacture MB-2 is (specify whether the change is an increase or a decrease): $____________
 d) The net change in operating income resulting from a decision to manufacture EB-2 is (specify whether the change is an increase or a decrease): $____________
 e) The net change in operating income resulting from a decision to manufacture both MB-2 and EB-2 is (specify whether the change is an increase or a decrease): $____________

Technical Chemical Manufactures Two Products as Part of a Joint