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

question 135

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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