Somalia Corporation Has a Joint Process That Produces Three Products

question 50

Multiple Choice

Somalia Corporation has a joint process that produces three products: X, Y, and Z.Each product may be sold at split-off or processed further and then sold.Joint-processing costs for a year amount to $100,000.Other relevant data are as follows: $\begin{array}{rlc} && \text { Separable } & \\&& \text { Processing } & \\&\text { Sales Value } & \text { Costs after } & \text { Sales Value } \\\text { Product } & \text {at Split-off } & \text { Split-off } & \text { at Completion }\\\mathrm{X} & \$ 128,000 & \$ 16,000 & \$ 160,000 \\\mathrm{Y} & 50,000 & 26,000 & 76,000 \\\mathrm{Z} & 25,600 & 20,000 & 40,000\end{array}$ In processing Product Z further _____.

• A)profits will decrease by $5,600
• B)incremental profits will exceed incremental costs
• C)profits will increase by $20,000
• D)the additional revenue produced will exceed the additional costs

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