Cambridge Company Manufactures Three Main Products, L, M, and N

question 62

Multiple Choice

Cambridge Company manufactures three main products, L, M, and N, from a joint process. Additional information for June production activity follows:

Assuming that the 10,000 units of N were processed further and sold for $78,000, what was Cambridge's gross profit from this sale? Assume the physical quantities method of allocation is used.

• A) $21,000.
• B) $28,500.
• C) $30,000.
• D) $66,000.

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Definitions:

Self-Serving Bias

A cognitive bias where individuals attribute positive outcomes to their own actions but negative outcomes to external factors.

System 2

A term often associated with dual-process theories of mind, representing the analytical, deliberate, and logical mode of thinking.

Framing Effects

Cognitive biases where people's decisions are influenced by the way information is presented, rather than just the information itself.

Anchoring

Anchoring is a psychological phenomenon wherein an individual relies too heavily on an initial piece of information, or 'anchor,' to make subsequent decisions.