Question 61. The Freed Company produces three products, X, Y, Z, from a single

61. The Freed Company produces three products, X, Y, Z, from a single raw material input. Product Y can be sold at the splitoff point for total revenues of $50,000, or it can be processed further at a total cost of $16,000 and then sold for $68,000. Product Y:

A) should be sold at the split-off point, rather than processed further.

B) would increase the company’s overall net operating income by $18,000 if processed further and then sold.

C) would increase the company’s overall net operating income by $68,000 if processed further and then sold.

D) would increase the company’s overall net operating income by $2,000 if processed further and then sold.

62. Pendall Company manufactures products Dee and Eff from a joint process. Product Dee has been allocated $2,500 of the $20,000 in total joint costs associated with the production of 1,000 units each of Dee and Eff each year. Dee can be sold at the split-off point for $3 per unit, or it can be processed further with additional costs of $1,000 and sold for $5 per unit. If Dee is processed further and sold, the result would be:

A) A break-even situation.

B) An additional gain of $1,000 from further processing.

C) A loss of $1,000 from further processing.

D) An additional gain of $2,000 from further processing.

63. Faustina Chemical Company manufactures three chemicals (TX14, NJ35, and KS63) from a joint process. The three chemicals are in industrial grade form at the split-off point. They can either be sold at that point or processed further into premium grade. Costs related to each batch of this chemical process is as follows:

For which product(s) above would it be more profitable for Faustina to sell at the split-off point rather than process further?

A) TX14 only

B) KS63 only

C) TX14 and KS63 only

D) NJ35 and KS63 only

64. Khiem, Inc. manufactures baseball gloves that normally sell for $55 each. Khiem currently has 400 defective gloves in inventory that have $35 of materials, labor, and overhead assigned to each glove. The defective gloves can either be completely repaired at a cost of $25 per glove or sold as is at a reduced price of $18 per glove. Khiem would be better off by:

A) $2,000 to sell the gloves at the reduced price.

B) $2,800 to sell the gloves at the reduced price.

C) $4,800 to repair the gloves and sell them at the normal price.

D) $5,200 to sell the gloves at the reduced price.

65. Two products, QI and VH, emerge from a joint process. Product QI has been allocated $9,600 of the total joint costs of $12,000. A total of 9,000 units of product QI are produced from the joint process. Product QI can be sold at the split-off point for $13 per unit, or it can be processed further for an additional total cost of $54,000 and then sold for $18 per unit. If product QI is processed further and sold, what would be the effect on the overall profit of the company compared with sale in its unprocessed form directly after the split-off point?

A) $18,600 less profit

B) $108,000 more profit

C) $600 more profit

D) $9,000 less profit

66. Two products, UG and BC, emerge from a joint process. Product UG has been allocated $29,400 of the total joint costs of $42,000. A total of 9,000 units of product UG are produced from the joint process. Product UG can be sold at the split-off point for $15 per unit, or it can be processed further for an additional total cost of $63,000 and then sold for $17 per unit. If product UG is processed further and sold, what would be the effect on the overall profit of the company compared with sale in its unprocessed form directly after the split-off point?

A) $74,400 less profit

B) $15,600 less profit

C) $45,000 less profit

D) $90,000 more profit

67. Priddy Corporation processes sugar cane in batches. The company purchases a batch of sugar cane for $62 from farmers and then crushes the cane in the company’s plant at the cost of $18. Two intermediate products, cane fiber and cane juice, emerge from the crushing process. The cane fiber can be sold as is for $28 or processed further for $13 to make the end product industrial fiber that is sold for $36. The cane juice can be sold as is for $43 or processed further for $23 to make the end product molasses that is sold for $85. Which of the intermediate products should be processed further?

A) Cane fiber should NOT be processed into industrial fiber; Cane juice should be processed into molasses

B) Cane fiber should be processed into industrial fiber; Cane juice should NOT be processed into molasses

C) Cane fiber should be processed into industrial fiber; Cane juice should be processed into molasses

D) Cane fiber should NOT be processed into industrial fiber; Cane juice should NOT be processed into molasses

68. Vannorman Corporation processes sugar beets in batches. A batch of sugar beets costs $78 to buy from farmers and $18 to crush in the company’s plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $25 or processed further for $16 to make the end product industrial fiber that is sold for $57. The beet juice can be sold as is for $39 or processed further for $22 to make the end product refined sugar that is sold for $84. How much profit (loss) does the company make by processing one batch of sugar beets into the end products industrial fiber and refined sugar?

A) ($134)

B) ($32)

C) $7

D) $39

69. Stinehelfer Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $56 to buy from farmers and $13 to crush in the company’s plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $24 or processed further for $12 to make the end product industrial fiber that is sold for $31. The beet juice can be sold as is for $43 or processed further for $29 to make the end product refined sugar that is sold for $91. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?

A) $19

B) $6

C) ($50)

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