Hogan Corporation Has a Joint Process Which Produces Three Products

Hogan Corporation has a joint process which produces three products: P, G, and A. Each product may be sold at split- off or processed further and then sold. Joint processing costs for a year amount to $25,000. Other relevant data are as follows: $\begin{array}{llll}&&\text { Separable }\\&&\text { Processing }\\& \text { Sales V alue at } & \text { Costs after } & \text { Sales Value at } \\\text { Product } & \text { Split- off } & \underline{\text { Split-off }} & \text { Completion }\\\mathrm{P} & \$ 32,000 & \$ 5,000 & \$ 40,000 \\\mathrm{G} & 16,500 & 7,500 & 29,000 \\\mathrm{~A} & 6,400 & 8,000 & 10,000\end{array}$ Once product P is produced, processing it further will cause profits to:

A) decrease by $5,000
B) decrease by $8,000
C) increase by $3,000
D) increase by $8,000

Correct Answer:

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