General Chemical Company (GCC) manufactures two products as part of a joint process: A1 and B1. Joint costs up to the split-off point total $22,000. The joint costs are allocated to A1 and B1 in proportion to their relative sales values. At the split-off point, product A1 can be sold for $42,000, whereas product B1 can be sold for $63,000. Product A1 can be processed further to make product A2, at an incremental cost of $38,000. A2 can be sold for $85,000. Product B1 can be processed further to make product B2, at an incremental cost of $48,000. B2 can be sold for $95,000.

Joint costs allocated to product A1 total:

$8,800.

$13,200.

$11,000.

$22,000.

Joint costs allocated to product B1 total:

$8,800.

$13,200.

$11,000.

$22,000.

The net change in operating income resulting from a decision to manufacture product A2 is:

$43,000 (increase).

$5,000 (decrease).

$5,000 (increase).

$38,000 (increase).

The net change in operating income resulting from a decision to manufacture product B2 is:

$16,000 (increase).

$16,000 (decrease).

$48,000 (decrease).

$32,000 (increase).