Two Products, TD and IB, Emerge from a Joint Process

question 53

Multiple Choice

Two products, TD and IB, emerge from a joint process. Product TD has been allocated $31,200 of the total joint costs of $48,000. A total of 5,000 units of product TD are produced from the joint process. Product TD can be sold at the split-off point for $24 per unit, or it can be processed further for an additional total cost of $15,000 and then sold for $26 per unit. If product TD 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) $5,000 less profit
• B) $115,000 more profit
• C) $36,200 less profit
• D) $26,200 more profit

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Definitions:

Bayesian Statistics

Statistics that involve a formula for calculating the likelihood of a hypothesis being true and meaningful, taking into account relevant prior knowledge.

Mathematical Statistics

A branch of mathematics dealing with the analysis, interpretation, presentation, and organization of data using statistical theories and methodologies.

Inferential Statistics

Statistical methods that allow researchers to make inferences or generalizations about a population based on a sample.

Representative Sample

A subset of a population that accurately reflects the members of the entire population.