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Glenwilliams Lumber Company manufactures 3 products: Poplar, Birch, and Pine from a joint process. Joint-process costs in 2007 were $3,000,000. Additional information regarding the three products is as follows:

-Based on the cost information provided, Poplar should be:
A) Sold at the split-off point
B) Processed further for an incremental profit of $4,000,000
C) Processed further for an incremental profit of $2,000,000
D) Either be sold at split-off point or processed further, depending upon how joint product costs are allocated

Question

Use the following to answer questions:
Glenwilliams Lumber Company manufactures 3 products: Poplar, Birch, and Pine from a joint process. Joint-process costs in 2007 were $3,000,000. Additional information regarding the three products is as follows:
 
-Based on the cost information provided, Poplar should be:
A) Sold at the split-off point 
B) Processed further for an incremental profit of $4,000,000 
C) Processed further for an incremental profit of $2,000,000 
D) Either be sold at split-off point or processed further, depending upon how joint product costs are allocated

Quizplus · Accepted Answer

The correct choice is based on the information that processing further results in an incremental profit of $2,000,000, which suggests that the additional revenue from processing exceeds the additional costs by this amount.

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