Paulsen Corporation Makes Two Products, W and P, in a Joint

question 85

Multiple Choice

Paulsen Corporation makes two products, W and P, in a joint process.At the split-off point, 50, 000 units of W and 60, 000 units of P are available each month.Monthly joint production costs are $290, 000.Product W can be sold at the split-off point for $5.60 per unit.Product P either can be sold at the split-off point for $4.75 per unit or it can be further processed and sold for $7.20 per unit.If P is processed further, additional processing costs of $3.10 per unit will be incurred. If P is processed further and then sold, rather than being sold at the split-off point, the change in monthly net operating income would be a:

• A)$147, 000 decrease
• B)$147, 000 increase
• C)$39, 000 increase
• D)$39, 000 decrease

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Definitions:

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Organizations that compete in stock car races sanctioned by the National Association for Stock Car Auto Racing (NASCAR).

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