Cancun Corporation Has a Joint Process Which Produces Three Products

Cancun Corporation has a joint process which produces three products: X, Y, and Z. Each product may be sold at split- off or processed further and then sold. Joint processing costs for a year amount to $100,000. Other relevant data are as follows: $\begin{array}{llll}&&\text { Separable }\\&&\text { Processing }\\\text { Product } & \begin{array}{l}\text { Sales Value at } \\\text { Split-off }\end{array} & \begin{array}{l}\text { Costs after } \\\text { Split-off }\end{array} & \begin{array}{l}\text { Sales Value at } \\\text { Completion }\end{array}\\\mathrm{X} & \$ 128,000 & \$ 16,000 & \$ 160,000 \\\mathrm{Y} & 75,000 & 26,000 & 99,000 \\\mathrm{Z} & 32,600 & 20,000 & 50,000\end{array}$ Once product X is produced, processing it further will cause profits to:

A) decrease by $16,000
B) increase by $16,000
C) decrease by $32,000
D) increase by $32,000

Correct Answer:

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