Boston 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:
$\begin{array}{llll}
&\text { Sales Value }&\text {Separable Processing }&\text {Sales Value }\
\text {Product }&\text {at Split-Off}&\text {Costs after Split-Off }&\text { at Completion}\
X & \$ 128,000 & \$ 16,000 & \$ 160,000 \
Y & 50,000 & 25,000 & 77,000 \
Z & 25,600 & 20,000 & 40,000
\end{array}$
Processing Product Y beyond the split-off point will cause profits to ________.
A) be unchanged
B) increase by $1,000
C) increase by $2,000
D) increase by $27,000

Question

Boston 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:
$\begin{array}{llll}
&\text { Sales Value }&\text {Separable Processing }&\text {Sales Value }\
 \text {Product }&\text {at Split-Off}&\text {Costs after Split-Off }&\text { at Completion}\
X & \$ 128,000 & \$ 16,000 & \$ 160,000 \
Y & 50,000 & 25,000 & 77,000 \
Z & 25,600 & 20,000 & 40,000
\end{array}$
Processing Product Y beyond the split-off point will cause profits to ________.
A) be unchanged
B) increase by $1,000
C) increase by $2,000
D) increase by $27,000

Quizplus · Accepted Answer

The increase in profit from processing Product Y further is calculated as the difference between the sales value at completion and the sum of the sales value at split-off and the separable processing costs: ($77,000 - $50,000 - $25,000) = $2,000.

Boston Corporation Has a Joint Process That Produces Three Products