Question

Delite Confectionary Company produces various types of candies. Several candies could be sold at the split-off point or processed further and sold in a different form after further processing. The candies are produced in a joint processing operation with $500,000 of joint processing costs monthly, which are allocated based on pounds produced. Information concerning this process for a recent month appears below:
Candy Type # of pounds Price per pound at split-off Further processing cost Price after processing further
Caramel 50,000 $8 $75,000 $10.00
Chocolate 100,000 $10 $30,000 $10.50
Mint 25,000 $5 $20,000 $5.50
The net advantage (disadvantage) of processing Caramel further is:

a.$25,000 disadvantage
b.$32,143 advantage
c.$ 25,000 advantage
d.$282,143 disadvantage

Answer 1

Answer:

Check the explanation

Explanation:

going by the above question we can calcu;ate Revenue if Caramel is sold at split off

=50000*$8 =$400000

the Incremental revenue if caramel is sold after further processing

=(50000*10)-(400000)

=$100000

Further processing cost $75000

Net Advantage=$100000-$75000

=$25000 advantage