1. 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 $23,000. 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 $32,100, whereas product Y1 can be sold for $74,900. Product X1 can be processed further to make product X2, at an incremental cost of $39,000. X2 can be sold for $86,000. Product Y1 can be processed further to make product Y2, at an incremental cost of $49,000. Y2 can be sold for $96,000.

The net change in operating income resulting from a decision to manufacture product X2 is:

2. 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 $23,000. 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 $32,100, whereas product Y1 can be sold for $74,900. Product X1 can be processed further to make product X2, at an incremental cost of $39,000. X2 can be sold for $86,000. Product Y1 can be processed further to make product Y2, at an incremental cost of $49,000. Y2 can be sold for $96,000.

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