Question
Brittany Furniture manufactures two products, pillows and cushions, from a joint process. Pillows are allocated $ 7,000 of the total joint costs of $ 28,000.
Brittany Furniture manufactures two products, pillows and cushions, from a joint process. Pillows are allocated $ 7,000
of the total joint costs of $ 28,000. There are 2,900 pillows produced and 2,900 cushions produced each year. Pillows can be sold at the split-off point
for $ 15 per unit, or they can be processed further into a deluxe pillow for additional processing costs of $ 8,300
and sold for $ 21 for each deluxe pillow. If the pillows are processed further and made into deluxe pillows, the effect on operating income would be:
A.
$ 43,500 net decrease in operating income.
B. $ 9,100 net increase in operating income.
C. $ 43,500 net increase in operating income.
D.$ 9,100 net decrease in operating income.
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