Question
Pet Products Inc. manufactures two products, cat bowls and dog bowls, from a joint process. Cat bowls are allocated 50% of the total joint costs
Pet Products Inc. manufactures two products, cat bowls and dog bowls, from a joint process. Cat bowls are allocated 50% of the total joint costs of $20000. There are 1,000 cat bowls produced and 1,000 dog bowls produced each year. Cat Bowls can be sold at the split-off point for $11 per unit, or they can be processed further into an extra fancy cat bowl for additional processing costs of $4920 and sold for $14 each.
What is the difference in operating income between processing the cat bowls further versus selling them off at the split-off point?
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