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What would be the overall effect on operating income

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Question - A joint production process at Happy Days Farm results in two products; blackberry syrup and blackberry jam. The following cost and activity data relate to these two products:

Joint costs allocated: Syrup-$10,000, Jam-$12,000

Number of units produced from joint process: Syrup-1,500, Jam-1,500

Selling price at split-off point: Syrup-$2.50, Jam-$1.75

Selling price after processing further: Syrup-$5.00, Jam-$2.00

Cost of processing further: Syrup-$2,000, Jam-$2,000

Blackberry syrup can be sold as-is (at the split-off point) for $2.50 per unit, or it can be processed further into a specialty blackberry juice and then sold for $5.00 per unit. If blackberry syrup is processed further into the specialty blackberry juice, what would be the overall effect on operating income?

A) $1,750 net decrease in operating income

B) $3,750 net increase in operating income

C) $1,750 net increase in operating income

D) $3,750 decrease in operating income

Reference no: EM131641861

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