15 Guster Chemical Company (GCC) manufactures two products as part of a joint process: X1 and Y1. Joint costs up to the split-off point total $26,500. The joint costs are allocated to X1 and Y1 in proportion to their relative sales values. At the split-off point, product X1 can be sold for $45,600, whereas product Y1 can be sold for $68,400. Product X1 can be processed further to make product X2, at an incremental cost of $42,500. X2 can be sold for $89,500. Product Y1 can be processed further to make product Y2, at an incremental cost of $52,500. Y2 can be sold for $99,500. The net change in operating income resulting from a decision to manufacture product X2 is:

$42,500 (increase).

$43,900 (increase).

$1,400 (increase).

$1,400 (decrease).

16.

Guster Chemical Company (GCC) manufactures two products as part of a joint process: X1 and Y1. Joint costs up to the split-off point total $26,500. The joint costs are allocated to X1 and Y1 in proportion to their relative sales values. At the split-off point, product X1 can be sold for $45,600, whereas product Y1 can be sold for $68,400. Product X1 can be processed further to make product X2, at an incremental cost of $42,500. X2 can be sold for $89,500. Product Y1 can be processed further to make product Y2, at an incremental cost of $52,500. Y2 can be sold for $99,500.

The net change in operating income resulting from a decision to manufacture product Y2 is:

$52,500 (decrease).

$31,100 (increase).

$21,400 (decrease).

$21,400 (increase).