Joint Production Decisions
Grassy Fertilizer Manufactures Two Lines of Garden

Joint production decisions
Grassy Fertilizer manufactures two lines of garden grade fertilizer as part of a joint production process: GF10 and GF20. Joint costs up to the split-off point total $85,000 per batch. These joint costs are allocated to GF10 and GF20 in proportion to their relative sales values at the split-off point of $40,000 and $60,000, respectively.
Both lines of garden grade fertilizer can be further processed into commercial grade fertilizer. The following table summarizes the costs and revenue associated with additional processing of GF10 and GF20:
$$\begin{array} { | l | l | l | } \hline & \text { Additional } & \begin{array} { l } \text { Final selling price } \\\text { per }\end{array} \\\hline & \text { Processing } & \text { batch of commercial } \\\hline & \text { Costs } & \text { grade fertilizer } \\\hline \text { GF10 } & \$ 18,000 & \$ 67,000 \\\hline \text { GF20 } & 38,000 & 97,000 \\\hline & & \\\hline\end{array}$$
(a) The $85,000 in joint costs should be allocated to each product as follows:
GF10 $____________, GF20 $_____________ (b) Which product (GF10 or GF20) would result in a net decrease in operating income if processed into a commercial grade fertilizer? ______________ (c) Which product (GF10 or GF20) would result in a net increase in operating income if processed into a commercial grade fertilizer? ______________