Wright Company Produces Products I, J, and K from a Single

question 52

Multiple Choice

Wright Company produces products I, J, and K from a single raw material input. Budgeted data for the next month follows: $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Product }$
$\begin{array}{ll}&I&J&K\\\text {Units produced. }&1,500&2,000&3,000\\\text {Per unit sales value at split-off. }&£10&£12&£15\\\text { Added processing costs per unit.}&£2&£4&£4\\\text { Per unit sales value if processed further.}&£15&£15&£20\\\end{array}$
If the cost of the raw material input is £78,000, which of the products should be processed beyond the split-off point?
$\quad$ $\quad$ $\quad$$\text { Product }$
$\begin{array}{lrr}&&\\ &\text {I}&&&\text {J}&&\text {K}\end{array}$

A. $\begin{array}{lrr} \text { yes } & \text { yes }& \text {no } \\\end{array}$
B. $\begin{array}{lrr} \text { yes } & \text {no } & \text { yes }\\\end{array}$
C. $\begin{array}{lrr} \text {no } & \text { yes }& \text {no } \\\end{array}$
D. $\begin{array}{lrr} \text {no } & \text { yes }& \text { yes }\\\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Offerings

Refers to the products or services provided by a business to its customers.

Earn Income

The process of receiving money as payment for work performed, or from investments.

B2C Marketing

Business-to-Consumer marketing, which focuses on selling products and services directly to individual customers.

Place Element

One of the four Ps in the marketing mix, referring to the strategies and processes used to make the product or service available to the target customer.