Lido Products Produces Two Products (A and B) from a Joint

question 86

Multiple Choice

Lido Products produces two products (A and B) from a joint process. The joint cost of production is $80 000. Five thousand units of Product A can be sold at split-off for $20 per unit or processed further at an additional cost of $20 000 and sold for $25 per unit. Ten thousand units of Product B can be sold at split-off for $15 per unit or processed further at an additional cost of $20 000 and sold for $16 per unit.
What is the difference in profit if Lido decides to process further Product A, instead of selling it at split-off?

• A) $25 000 increase
• B) $5000 increase
• C) $21 000 increase
• D) $27 000 decrease

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