A company manufactures three products, A, B, and C from a single raw material input. Product C can be sold at the split-off point for total revenues of $60,000 or it can be processed further at a total cost of $16,000 and then sold for $78,000. Product C:
A) should be sold at the split-off point, rather than processed further.
B) would increase the company's overall net income by $18,000 if processed further and then sold.
C) would increase the company's overall net income by $78,000 if processed further and then sold.
D) would increase the company's overall net income by $2000 if processed further and then sold.

Question

Quizplus · Accepted Answer

The increase in operating income would be $2000 by further processing: $78,000 - $16,000 = $62,000 less the revenues at the split-off point of $60,000 = $2000.

A Company Manufactures Three Products, A, B, and C from a Single