Use the Information Below to Answer the Following Question(s)

question 175

Multiple Choice

Use the information below to answer the following question(s) .Cranbrook Chemical Ltd.manufactures two industrial compounds.In the month of May, 15,000 litres of direct material costing $160,000 were processed at a cost of $400,000.The joint process yielded 16,000 containers of a compound known as Jarlon and 4,000 containers of a compound known as Kharton.The respective selling prices of Jarlon and Kharton are $38 and $58.Both products may be processed further.Jarlon may be processed into Jaxton at an incremental cost of $8 per jar of the final product while Kharton may be processed into Kraxton at an additional cost of $32 per jar of the final product.The volume of jars of the final product are: 12,000 and 3,000 for Jaxton and Kraxton respectively.The selling price of Jaxton is $48 per jar.The selling price of Kraxton is $102 per jar.
-The incremental benefit or (loss) of processing Jarlon into Jaxton is

• A)$480,000.
• B)($128,000).
• C)$64,000.
• D)($96,000).
• E)($32,000).

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Definitions:

Control Limits

Control limits are statistical boundaries set in process control charts to determine if a process is operating in a state of statistical control or if there are variations that require attention.

Centerline

A reference line drawn on a graph or chart that represents the average, norm, or expected value of a set of data or a process control chart.

Process Capability Index

A measure used to quantify how well a process can meet specified output requirements.

Specification Limits

The bounds within which the values of a product, process, or service must lie to meet quality standards.