Atlanta Manufacturing Company produces products W, X, Y, and Z through a joint process. The joint costs amount to $250,000.
If W is processed further, profits of W will:

Question

Atlanta Manufacturing Company produces products W, X, Y, and Z through a joint process. The joint costs amount to $250,000.
 If W is processed further, profits of W will:

Quizplus · Accepted Answer

By processing Product W further, the sales value is increased by $5,000 (or $15,000 - $10,000), and cost of additional processing is $2,500 for an increase in net profit of $2,500. The joint costs are all sunk; therefore, they are irrelevant.

Atlanta Manufacturing Company Produces Products W, X, Y, and Z