Cancun Corporation Has a Joint Process Which Produces Three Products

question 17

Multiple Choice

Cancun Corporation has a joint process which produces three products: X, Y, and Z. Each product may be sold at split- off or processed further and then sold. Joint processing costs for a year amount to $100,000. Other relevant data are as follows: $\begin{array}{llll}&&\text { Separable }\\&&\text { Processing }\\\text { Product } & \begin{array}{l}\text { Sales Value at } \\\text { Split-off }\end{array} & \begin{array}{l}\text { Costs after } \\\text { Split-off }\end{array} & \begin{array}{l}\text { Sales Value at } \\\text { Completion }\end{array}\\\mathrm{X} & \$ 128,000 & \$ 16,000 & \$ 160,000 \\\mathrm{Y} & 75,000 & 26,000 & 99,000 \\\mathrm{Z} & 32,600 & 20,000 & 50,000\end{array}$ Once product X is produced, processing it further will cause profits to:

• A) decrease by $16,000
• B) increase by $16,000
• C) decrease by $32,000
• D) increase by $32,000

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Definitions:

Punished Severely

Subject to harsh or strict penalties or consequences, often in response to a violation of law or rules.

Disreputable

Having a bad reputation, not respected or trusted by most people.

Actual Violence

Physical force used with the intent to harm or damage something or someone.

Armed Robbery

A criminal act involving theft or larceny carried out by individuals wielding weapons.