A Joint Production Process at Sunnybrook Farms Results in Two

question 70

Multiple Choice

A joint production process at Sunnybrook Farms results in two products,strawberry syrup and strawberry jam.Strawberry syrup can be further processed into strawberry juice,and strawberry jam can be further processed into specialty jams.The following cost and activity data relate to these two products:

If strawberry syrup is processed further into the specialty strawberry juice,what would be the overall effect on operating income assuming the same number of units will be produced?

• A)$5,000 net increase in operating income
• B)$5,000 net decrease in operating income
• C)$2,000 net increase in operating income
• D)$2,000 net decrease in operating income

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Definitions:

Accrued Liabilities

Liabilities that have been incurred but not yet paid or recorded at the end of the accounting period.

Accrued Receivables

Amounts owed to a business for goods or services delivered but not yet paid by the end of an accounting period.

Income Summary Account

An account used in closing to collect revenues and expenses, the balance of which shows the net income or loss for the period.

Debit Balance

A debit balance is an accounting entry that occurs on the left side of the ledger and indicates the amount of money owed or an increase in assets or expenses.