The Wyeth Corporation Produces Three Products, A, B, and C

question 267

Multiple Choice

The Wyeth Corporation produces three products, A, B, and C, from a single raw material input. Product A can be sold at the splitoff point for $40,000, or it can be processed further at a total cost of $15,000 and then sold for $58,000. Joint costs total $60,000 annually. Product A should be:

• A) discontinued because revenues after further processing are less than total joint costs.
• B) sold at the split-off point.
• C) processed further and then sold.
• D) processed further only if its share of the total joint costs is less than the incremental revenues from further processing.