A Joint Input Costing $500 Results in Four Distinct Products

question 67

Multiple Choice

A joint input costing $500 results in four distinct products at the point of split-off. Relevant data follows: Sales Value Separable Sales Value After
Product at Split-Off Cost Further Processing
J $200 $100 $400
K 300 200 600
L 100 50 140
M 20 10 40
Assume that K is processed further and that management is considering an alternative to the current process. The new separable cost of processing would be $250. If the firm is to be no worse off, the product must sell for at least:

• A)$550
• B)$650
• C)$750
• D)$850

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Definitions:

Capital Stock

The total amount of physical and financial assets owned by a company or country, excluding liabilities.

Expected Rate Of Profit

The anticipated return on an investment, calculated based on the potential risks and rewards associated with the investment.

Money Invested

Funds allocated for the purpose of generating income or profit through purchases of assets, securities, or other financial instruments.

Rate Of Interest

The charge, quantified as a percentage of the principal, that a borrower pays to a lender for the privilege of using assets.