A Joint Input Costing $500 Results in Four Distinct Products

question 73

Multiple Choice

A joint input costing $500 results in four distinct products at the point of split-off. Relevant data follows: $\begin{array}{cccc}&\text { Sales Value } &\text {Separable} &\text {Sales Value After }\\\text { Product } &\text { at Split-Off } &\text { Cost } & \text { Further Processing }\\\text {J }& \$ 200 & \$ 100 & \$ 400 \\\text {K }& 300 & 200 & 600 \\\text {L }& 100 & 50 & 140 \\\text {M} & 20 & 10 & 40\end{array}$

Assume that K is processed further and that management is considering an alternative to the current process. The new separable cost of processing would be $250. If the firm is to be no worse off, the product must sell for at least:

• A) $550
• B) $650
• C) $750
• D) $850

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