Autry Company manufactures veterinary products.One joint process involves refining a chemical (dactylyte) into two chemicals ? dac and tyl.One batch of 5,000 gallons of dactylyte can be converted to 2,000 gallons of dac and 3,000 gallons of tyl at a total joint processing cost of $12,000.At the split-off point, dac can be sold for $3 per gallon and tyl can be sold for $4 per gallon.Autry has just learned of a new process to convert dac into prodac.The new process costs $4,000 and yields 1,700 gallons of prodac for every 2,000 gallons of dac.Prodac sells for $5 per gallon.
Should Autry process dac further?

Question

Autry Company manufactures veterinary products.One joint process involves refining a chemical (dactylyte) into two chemicals ? dac and tyl.One batch of 5,000 gallons of dactylyte can be converted to 2,000 gallons of dac and 3,000 gallons of tyl at a total joint processing cost of $12,000.At the split-off point, dac can be sold for $3 per gallon and tyl can be sold for $4 per gallon.Autry has just learned of a new process to convert dac into prodac.The new process costs $4,000 and yields 1,700 gallons of prodac for every 2,000 gallons of dac.Prodac sells for $5 per gallon. 
Should Autry process dac further?

Quizplus · Accepted Answer

11ea8a4c_48b0_1c6e_a0e6_85c9cac73717_TB5550_00 Gross profit is $1,500 less ($4,500 - $6,000).
*Revenue 2nd option $18,000 - $6,000 + $8,500 = $20,500.
($3 F1F1F1S1-F1F1F10 2,000) = $6,000 Sales of dac that would not occur if action taken.
($5 F1F1F1S1-F1F1F10 $1,700) = $8,500 Sales of prodac that would occur if action taken.

Autry Company Manufactures Veterinary Products