QUESTION:

NOTE: Two problems in the Module 12 Homework Assignment use the same information but ask different questions.

Lilybird Inc. produces two products from a common process. Joint costs are $100,900.

Each of the products can be sold at the split-off point or can be process further and then sold for a higher price. The cost and selling price data for a recent period is as follows:

	Sales Value at Split-off Point	Cost to Process Further	Sales Value after Further Processing
Product A	$49,200	$100,900	$190,200
Product B	$10,600	$29,800	$35,600

Using the above information answer the following questions.

Using incremental analysis, should Product B be sold at the split-off point or processed further and then sold?

Input the letter A if it should be sold at the split-off point.

Input the letter B if it should be processed further and then sold.

Would operating income increase or decrease if Product B was process further?

Enter the letter A for increase.

Enter the letter B for decrease.

By how much will operating income increase or decrease by if Product B was process further?

Enter your answer as a positive number even if operating income would decrease.