Served Inc. Manufactures two products, salad plates and platters, from a joint process. Salad plates are allocated $7,900 of the total joint costs of $26,000. There are 3,500 salad plates produced and 3,500 platters produced each year. Salad plates can be sold at the splitminusoff point for $10 per unit, or they can be hand painted for additional processing costs of $8,600 and sold for $19 for each deluxe salad plate. If the salad plates are processed further and made into deluxe plates, the effect on operating income would be A. $22,900 net decrease in operating income. B. $35,000 net increase in operating income. C. $35,000 net decrease in operating income. D. $22,900 net increase in operating income.

Option D is correct,$22,900 net increase in operating income.

Step-by-step explanation:

The formula for determining the effects of the salad plates being processed further is giving below:

increase/decrease in net income=sales value when processed further-sales value if sold at split-off point-the costs of further processing.

sales value when further processed=$19*3500=$ 66,500.00  

sales value at split-off point=$10*3500=$35,000

additional costs of further processing =$8600

increase/(decrease) in operating income=$ 66,500.00-$35,000.00-$8,600.00=$ 22,900.00  

The correct option is $ 22,900.00  net increase in operating income

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step-by-step explanation: