Brookfield Corporation has a joint process that 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 data follows:
$\begin{array}{llll}
&\text { Sales Value }&\text {Separable Processing }&\text {Sales Value }\
\text {Product }&\text {at Split-Off}&\text {Costs after Split-Off }&\text { at Completion}\
X & \$ 128,000 & \$ 16,000 & \$ 150,000 \
Y & 75,000 & 26,000 & 99,000 \
Z & 32,600 & 20,000 & 50,000
\end{array}$
Processing Product X beyond the split-off point will cause profits to ________.
A) be unchanged
B) increase by $6,000
C) increase by $16,000
D) increase by $22,000

Question

Brookfield Corporation has a joint process that 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 data follows:
$\begin{array}{llll}
&\text { Sales Value }&\text {Separable Processing }&\text {Sales Value }\
 \text {Product }&\text {at Split-Off}&\text {Costs after Split-Off }&\text { at Completion}\
X & \$ 128,000 & \$ 16,000 & \$ 150,000 \
Y & 75,000 & 26,000 & 99,000 \
Z & 32,600 & 20,000 & 50,000
\end{array}$
Processing Product X beyond the split-off point will cause profits to ________.
A) be unchanged
B) increase by $6,000
C) increase by $16,000
D) increase by $22,000

Quizplus · Accepted Answer

Processing Product X beyond the split-off point increases profits by $6,000 because the sales value at completion ($150,000) minus the sales value at split-off ($128,000) minus the separable processing costs after split-off ($16,000) equals $6,000 ($150,000 - $128,000 - $16,000 = $6,000).

Brookfield Corporation Has a Joint Process That Produces Three Products