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Salt Island Pottery Ltd. manufactures two products, bowls and plates, from a joint process. Bowls are allocated $5,000 of the total joint costs of $25,000.
Salt Island Pottery Ltd. manufactures two products, bowls and plates, from a joint process. Bowls are allocated $5,000 of the total joint costs of $25,000. There are 1,500 bowls produced and 1,500 plates produced each year. Bowls can be sold at the split- off point for $12 per unit, or they can be processed further into a deluxe bowl for additional processing costs of $5,000 and sold for $16 for each deluxe bowl. By how much will operating income change if the company chooses to process deluxe bowls?
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