Reference no: EM132738971

Wallace Company produces 15,000 pounds of Product A and 30,000 pound of Product B each week by incurring a common variable costs of P400,000. These two products can be sold as is or processed further. Further processing of either product does not delay the production of subsequent batches of the joint product.

Data gathering there two products are as follows:

                                                                                              Product A                   Product B

Selling price per pound without further Processing          P 12.00                    P 9.00

Selling price per pound with further Processing              P15.00                       P 11.00

Total separate weekly variable costs of Further processing P50,000 P45,000

Problem 1: To maximize Wallace Company's manufacturing contribution margin, the total separate variable costs of further processing that should be incurred each week are

A. P45,000        C. P95,000

B. P50,000             D. P0