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Delite Confectionary Company produces various types of candies. Several candies could be sold at the split-off point or processed further and sold in a different
Delite Confectionary 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:
Candy Type | # of pounds | Price per pound at split-off | Further processing cost | Price after processing further |
Caramel | 50,000 | $8 | $75,000 | $10.00 |
Chocolate | 100,000 | $10 | $30,000 | $10.50 |
Mint | 25,000 | $5 | $20,000 | $5.50 |
The net advantage (disadvantage) of processing Caramel further is:
$25,000 disadvantage |
$32,143 advantage |
$ 25,000 advantage |
$282,143 disadvantage |
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