Two Products,IF and RI,emerge from a Joint Process

question 7

Multiple Choice

Two products,IF and RI,emerge from a joint process.Product IF has been allocated $25,300 of the total joint costs of $46,000.A total of 2,000 units of product IF are produced from the joint process.Product IF can be sold at the split-off point for $11 per unit,or it can be processed further for an additional total cost of $10,000 and then sold for $13 per unit.If product IF is processed further and sold,what would be the effect on the overall profit of the company compared with sale in its unprocessed form directly after the split-off point?

• A)$31,300 less profit
• B)$6,000 less profit
• C)$16,000 more profit
• D)$19,300 more profit

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Definitions:

COGS

COGS, or Cost of Goods Sold, represents the direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Payables Turnover Rate

An efficiency ratio that measures how quickly a company pays off its suppliers, calculated as cost of goods sold divided by average accounts payable.

Accounts Payable Balance

The total amount of short-term liabilities or obligations a company owes to its creditors or suppliers.

Sales

The total revenue generated from goods or services sold by a company during a specific period.