Figure 6-10
Manning Company Uses a Joint Process to Produce

question 35

Multiple Choice

Figure 6-10
Manning Company uses a joint process to produce products W, X, Y, and Z. Each product may be sold at its split-off point or processed further. Additional processing costs of specific products are entirely variable. Joint processing costs for a single batch of joint products are £120,000. Other relevant data are as follows: $\begin{array}{crcr}& \text { Sales Value } & \text { Additional } & \text { Sales Value of } \\\text { Froduct } & \text { at Split-Off } & \text { Processing Costs } & \text { Final Product }\\\hline Y & £ 20,000 & £ 32,000 & £ 120,000 \\Z & 28,000 & 20,000 & 32,000 \\W & 40,000 & 60,000 & 80,000 \\X & 12,000 & 4,000 & 20,000 \\&£100,000&£116,000&£252,000\end{array}$
-Refer to Figure 6-10. Which products should Manning process further?

• A)all
• B)all except Z
• C)Y and X
• D)none

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Definitions:

Calls

Financial instruments giving the holder the right to buy a stock or commodity at a specified price within a specific time period.

Variable Costs

Expenses that vary directly with the level of production or output.

Variable Cost

Expenses that change in direct proportion to the amount of business or production activity.

Variable Cost Per Unit

The cost that varies with the level of output or activities, calculated on a per-unit basis.