Dumpster Company Produces Three Products Using a Joint Process Which

question 85

Multiple Choice

Dumpster Company produces three products using a joint process which accumulates $25,000 in joint costs. The products, A, B, and C, can be sold at split- off or processed further and then sold. The production level for each product is 1,000 units. The following unit information is also available: $\begin{array}{llll}&&\text { Separable }\\&&\text { Processing }\\& \text { Sales V alue at } & \text { Costs after } & \text { Sales Value at } \\\text { Product } & \text { Split- off } & \underline{\text { Split-off }} & \text { Completion }\\\mathrm{A} & \$ 12 & \$ 9 & \$ 21 \\\mathrm{~B} & 10 & 4 & 17 \\\mathrm{C} & 15 & 6 & 19\end{array}$ If Dumpster Company makes the decisions that maximize profit, Dumpster Company's net income will be:

• A) $30,000
• B) $32,000
• C) $15,000
• D) $47,000

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Definitions:

Saving

The portion of income that is not spent on consumption but rather set aside for future use or emergencies, contributing to personal and national wealth.

Autonomous Consumption

The level of consumption that occurs when income is zero, reflecting expenses that are necessary or committed.

Induced Consumption

The portion of consumption that changes in response to changes in income, where higher income levels lead to higher consumption.

Disposable Income

Funds available for saving or spending once taxes and contributions to social security are deducted.