Payne Company Makes Two Products, M and N, in a Joint

question 41

Multiple Choice

Payne Company makes two products, M and N, in a joint process. At the split-off point, 40,000 units of M and 50,000 units of N are available each month. Monthly joint production costs are $270,000.
Product M can be sold at the split-off point for $4.20 per unit. Product N can either be sold at the split-off point for $3.20 per unit or it can be processed further and sold for $6.30 per unit. If N is processed further, additional processing costs of $2.50 per unit will be incurred.
-If N is processed further and then sold,rather than being sold at the split-off point,the change in monthly operating income would be a:

• A)$30,000 increase
• B)$315,000 increase
• C)$155,000 increase
• D)$125,000 decrease

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Definitions:

Slow-Growth Markets

Markets characterized by lower rates of growth compared to other markets, often due to market maturity or saturation.

Dominant Shares

Refers to the largest portion of market share controlled by one company, product, or entity, often indicating a position of market leadership or monopoly.

SBUs

Strategic Business Units, which are smaller entities within a larger corporation that operate as separate profit centers.

Quadrant A

Often part of a matrix or chart classification system, Quadrant A could refer to a specific sector defined by two variables used in strategic analysis or planning.