Bergamit Company manufactures veterinary products.One joint process involves refining a chemical (dactylyte) into two chemicals dac and tyl.One batch of 10,000 gallons of dactylyte can be converted to 4,000 gallons of dac and 6,000 gallons of tyl at a total joint processing cost of $15,000.At the split-off point, dac can be sold for $5 per gallon and tyl can be sold for $7 per gallon.Bergamit has just learned of a new process to convert dac into prodac.The new process costs $5,000 and yields 2,500 gallons of prodac for every 3,000 gallons of dac.Prodac sells for $6 per gallon.
What is Bergamit's profit from refining one batch of dactylyte if both dac and tyl are sold at the split-off point?

Question

Bergamit Company manufactures veterinary products.One joint process involves refining a chemical (dactylyte) into two chemicals  dac and tyl.One batch of 10,000 gallons of dactylyte can be converted to 4,000 gallons of dac and 6,000 gallons of tyl at a total joint processing cost of $15,000.At the split-off point, dac can be sold for $5 per gallon and tyl can be sold for $7 per gallon.Bergamit has just learned of a new process to convert dac into prodac.The new process costs $5,000 and yields 2,500 gallons of prodac for every 3,000 gallons of dac.Prodac sells for $6 per gallon. 
What is Bergamit's profit from refining one batch of dactylyte if both dac and tyl are sold at the split-off point?

Quizplus · Accepted Answer

*Revenue = [(Quantity of dac × Selling price of dac) + (Quantity of tyl × Selling price of tyl)] = [(4,000 gallons × $5) + (6,000 gallons × $7)] = $20,000 + $42,000 = $62,000
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Bergamit Company Manufactures Veterinary Products