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. Refer to the information above. The net change in operating income resulting from a decision to manufacture product A2 is:

Question

09-12-2019
Business

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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. Refer to the information above. The net change in operating income resulting from a decision to manufacture product A2 is:

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cancinodavidq cancinodavidq · Answer 1 · 2019-12-11T17:00:21+01:00

Answer

The answer and procedures of the exercise are attached in the following archives.

Additional questions:

1. Joint costs allocated to product A1 total

2. Joint costs allocated to product B1 total

3. The net change in operating income resulting from a decision to manufacture product A2 is

4. The net change in operating income resulting from a decision to manufacture product B2 is

Explanation

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.