The Freed Company produces three products,X,Y,and Z from a single raw material input.Product Y can be sold at the split-off point for total revenues of $50,000 or it can be processed further at a total cost of $16,000 and then sold for $68,000.Product Y:
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 $68,000 if processed further and then sold.
D)would increase the company's overall net income by $2,000 if processed further and then solD.Process further: $68,000 - 16,000 = $52,000 vs.$50,000 sell now

Question

Quizplus · Accepted Answer

Processing further would result in a net gain of $2,000 ($68,000 - $16,000 = $52,000, which is $2,000 more than the $50,000 if sold at split-off).

The Freed Company Produces Three Products,X,Y,and Z from a Single