Conviser Tools Manufactures a Number of Products from the Same

question 67

Multiple Choice

Conviser Tools manufactures a number of products from the same raw material.Joint processing costs total $10,000.Product A could be sold at the cut-off point for $18,000 or it can be further processed at a cost of $9,000 and then sold for $35,000.Conviser should:

• A)Further process product A because its incremental revenues will exceed incremental costs by $8,000.
• B)Further process product A because its incremental revenues will exceed incremental costs by $26,000.
• C)Sell as-is because the incremental loss is $2,000 if processed further.
• D)Further process product A because its incremental revenues will exceed incremental costs by $16,000.

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Definitions:

MRI

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Diffusion of Responsibility

A phenomenon where individuals in a group are less likely to take action or feel a sense of responsibility because the responsibility is spread across the entire group.

Distressing Situation

An event or circumstance that causes anxiety, sorrow, or pain, often triggering emotional or psychological stress.

Presence

The state or fact of existing, occurring, or being present in a place or thing.