WP Company Produces Products X,Y,and Z from a Single Raw

question 15

Multiple Choice

WP Company produces products X,Y,and Z from a single raw material input in a joint production process.Budgeted data for the next month is as follows:
$\begin{array}{l}\begin{array}{lll}\\\text { Units Produced } \\\text { Per Unit Sales Value at Split-Off } \\\text { Added Processing Costs per Unit } \\\text { Per Unit Sales Value if Processed Further }\\\end{array}\begin{array}{lll}\underline { X } & \underline { Y } & \underline { Z }\\1,500 & 2,000 & 3,000 \\\$ 19 & \$ 21 & \$ 24 \\\$ 7 & \$ 7.50 & \$ 7 \\\$ 29 & \$ 29 & \$ 30\end{array}\end{array}$
The cost of the joint raw material input is $149,000.Which of the products should be processed beyond the split-off point? $\begin{array}{lccc}& \mathrm { X } & \mathrm { Y } & \mathrm { Z } \\\text { A) } & \text { Yes } & \text { Yes } & \text { No } \\\text { B) } & \text { No } & \text { Yes } & \text { No } \\\text { C) } & \text { Yes } & \text { No } & \text { Yes } \\\text { D) } & \text { No } & \text { Yes } & \text { Yes }\end{array}$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

---

Definitions:

Cost-output Elasticity

Cost-output elasticity measures the responsiveness of the cost of production to changes in the quantity of output produced, indicating the scale economies in production.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Marginal Cost

The expenditure required to produce an additional unit of a product.

Short-run Cost Function

An economic formula that describes how production costs change in the short term with varying levels of output, assuming some inputs are fixed.