A joint production process at Berry Lane Farm results in two products, blackberr

Question

A joint production process at Berry Lane Farm results in two products, blackberry syrup and blackberry jam. The following cost and activity data relate to these two products: BlackberryBlackberry jam $10,000 $12,000 syrup Joint costs allocated Number of units produced from ,800,800 joint process Selling price at split -off point Selling price after processing $2.80 $1.75 5.40 2.00 OA. $5,040 net decrease in operating income OB. $2,680 net increase in operating income C. $5,040 net increase in operating income O D. $2,680 net decrease in operating income

Explanation / Answer

Calculate effect on further processing of blackberry syrup :

so answer is b) $2680 net increase in operating income

Blackberry syrup Sale after further processing (1800*5.40) 9720 Sale at split off point (1800*2.80) 5040 Incremental revenue 4680 Less : Incremental cost (2000) Incremental income 2680

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