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:

Compute

The process of using mathematical and logical operations to perform tasks and solve problems by a computer.

Average Accounting Return

The average accounting return is a financial ratio that represents the average annual accounting profit compared to the initial investment.

IRR

Internal Rate of Return, a financial metric used to estimate the profitability of potential investments by finding the interest rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Projects

Specific tasks or programs undertaken to achieve a goal, often characterized by defined scope, resources, and timeframe.