Great Sweets Candy Company produces various types of candies.Several candies could be sold at the split-off point or processed further and sold in a different form after further processing.The candies are produced in a joint processing operation with $500,000 of joint processing costs monthly,which are allocated based on pounds produced.Information concerning this process for a recent month appears below: The net advantage (disadvantage)of processing Sweet Meats further is:

Question

Great Sweets Candy Company produces various types of candies.Several candies could be sold at the split-off point or processed further and sold in a different form after further processing.The candies are produced in a joint processing operation with $500,000 of joint processing costs monthly,which are allocated based on pounds produced.Information concerning this process for a recent month appears below:  The net advantage (disadvantage)of processing Sweet Meats further is:

Quizplus · Accepted Answer

From the chart, we can see that the incremental revenue from processing Sweet Meats further is $270,000 ($810,000 - $540,000) and the additional processing costs are $245,000 ($500,000/2 + $60,000 + $135,000*2). The net advantage of processing Sweet Meats further is therefore $25,000 ($270,000 - $245,000).

Great Sweets Candy Company Produces Various Types of Candies