Question
Posh Pillows manufactures two products, pillows and cushions, from a joint process. Pillows are allocated.$7,300 of the total joint costs of $29,000. There are 2,500
Posh Pillows manufactures two products, pillows and cushions, from a joint process. Pillows are allocated.$7,300 of the total joint costs of $29,000. There are 2,500 pillows produced and 2,500 cushions produced each year. Pillows can be sold at the splitminusoff point for $ 12per unit, or they can be processed further into a deluxe pillow for additional processing costs of $8,100 and sold for $ 18 for each deluxe pillow. If the pillows are processed further and made into deluxe pillows, the effect on operating income would be
A.$30,000 net decrease in operating income.
B. $6,900 net decrease in operating income.
C. $30,000 net increase in operating income.
D. $6,900 net increase in operating income.
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