Question

Lyon Manufacturing Company produces products A, B, C, and D through a joint process. The joint costs amount to $100,000. Product Units Produced Sales Value at Split-Off Additional Costs of Processing Sales Value After Processing A 1,500 $10,000 $2,500 $15,000 B 2,500 $30,000 $3,000 $35,000 C 2,000 $20,000 $4,000 $25,000 D 3,000 $40,000 $6,000 $45,000 If B is processed further, profits will: Group of answer choices

Answer 1

Answer:

Increase by $2,000.

Explanation:

Calculation to determine what the profit will be if B is processed further,

First step is to calculate the Inremental Revenue

Inremental Revenue,=

$35,000 - $30,000

Inremental Revenue = $5,000

Now let calculate B profit if processed further

Using this formula

B profit if processed further=Inremental Revenue- Incremental Cost

Let plug in the formula

B profit if processed further=$5,000-$3,000

B profit if processed further= $2,000 Increase

Therefore If B is processed further, profits will Increase by $2,000.