Business, 14.02.2020 04:29 alex12354

General Chemical Company (GCC) manufactures two products as part of a joint process: A1 and B1. Joint costs up to the split-off point total $22,000. The joint costs are allocated to A1 and B1 in proportion to their relative sales values. At the split-off point, product A1 can be sold for $42,000, whereas product B1 can be sold for $63,000. Product A1 can be processed further to make product A2, at an incremental cost of $38,000. A2 can be sold for $85,000. Product B1 can be processed further to make product B2, at an incremental cost of $48,000. B2 can be sold for $95,000.

Joint costs allocated to product A1 total:
a. $8,800.
b. $13,200.
c. $11,000.
d. $22,000.

Joint costs allocated to product B1 total:
a. $8,800.
b. $13,200.
c. $11,000.
d. $22,000.

The net change in operating income resulting from a decision to manufacture product A2 is:
a. $43,000 (increase).
b. $5,000 (decrease).
c. $5,000 (increase).
d. $38,000 (increase).

The net change in operating income resulting from a decision to manufacture product B2 is:
a. $16,000 (increase).
b. $16,000 (decrease).
c. $48,000 (decrease).
d. $32,000 (increase).

Answers: 3

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