Question 42

Reference: 12-16

Dowchow Company makes two products from a common input. Joint processing costs up to the split-off point total $38,400 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below:

Product XProduct YTotalAllocated Joint Processing Costs20,80017,60038,400Sales Value at Split-Off Point26,00022,00048,000Costs of Further Processing22,60020,40043,000Sales Value after Further Processing45,00045,90090,900

What is the net monetary advantage of processing Product Y beyond the split-off point?

Question 42 options:

A)

$25,500.

B)

$3,500.

C)

$29,900.

D)

$7,900.