Orange 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.The production level for each product is 10,000 units.Other data follows: If Product P is processed beyond the split-off point,profit will ________.
A)increase $90,000
B)increase $120,000
C)increase $210,000
D)stay the same

Question

Orange 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.The production level for each product is 10,000 units.Other data follows:  If Product P is processed beyond the split-off point,profit will ________.
A)increase $90,000 
B)increase $120,000 
C)increase $210,000 
D)stay the same

Quizplus · Accepted Answer

The question does not provide any information about the additional revenue or cost incurred if Product P is processed beyond the split-off point, so we cannot determine if profit will increase or decrease. Therefore, the profit will stay the same if Product P is processed beyond the split-off point.

Orange Corporation Has a Joint Process That Produces Three Products