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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