Reference no: EM132841009

Problem 1: Johnson Glass Inc. manufactures two products from a joint process: wine glasses and drinking glasses. Wine glasses are allocated $7,900 of the total joint costs of $26,000. There are 3,500 wine glasses produced and 3,500 drinking glasses produced each year. Wine glasses can be sold at the split-off point for $5 per unit, or they can be hand painted for additional processing costs of $8,600 and sold for $9.50 for each deluxe wine glass. If the wine glasses are processed further and made into deluxe wine glasses, the effect on operating income would be

Option 1: $15,750 net increase in operating income.

Option 2: $7,150 net increase in operating income.

Option 3: $7,150 net decrease in operating income.

Option 4: $15,750 net decrease in operating income.