Ralston Tile Produces Three Types of Ceramic Tiles, Models 33

question 112

Short Answer

Ralston Tile produces three types of ceramic tiles, models 33, 41, and 56 from clay, which is mined in the Arizona desert.Budgeted data for next month follows: $\begin{array}{lrrr}&33&41&56\\\text { Units produced } & 3,000 & 4,500 & 6,000 \\\hline \text { Sales value at split-off per unit } & \$ 15 & \$ 18 & \$ 24 \\\text { Additional processing costs per unit } & \$ 4 & \$ 6 & \$ 7 \\\text { Joint production costs per unit } & \$ 2 & \$ 5 & \$ 5 \\\text { Sales value if processed further per unit } & \$ 20 & \$ 23 & \$ 32\end{array}$

The joint cost of mining the clay is $\$ 80,000$ . Which of the products should be produced beyond the split-off point?

$\quad\underline{33} \quad\quad \underline{41} \quad \underline{56}$
A. $\text { Yes\quad Yes\quad Yes }$
B. $\text { Yes \quad Yes\quad No }$
C. $\text { No } \quad \text { Yes } \quad \text { Yes }$
D. $\text { Yes } \quad \text { No } \quad \text { Yes }$