Posh Pillows manufactures two products, pillows and cushions, from a joint proce
ID: 2514778 • Letter: P
Question
Posh Pillows manufactures two products, pillows and cushions, from a joint process Pllows are allocated $7,000 of the total joint costs of $30,009 There are 2,900 pllows produced and 2,500 cushions produced each year Pilows can be sold at the split-off point for $10 per unit, or they can be processed further into a deluxe pillow for additional processing costs of $8,300 and sold for $21 for each delaxe pllow t the pllows ane pracessed futher and made into deluxe plows, the effect on operating income would be O A. $23.600 net decrease in operating income O B. $29,000 net decrease in operating income O C. $29,000 net increase in operating income O D. $23,600 net increase in operating incomeExplanation / Answer
D. $23,600 net increase in operating income.
Selling Price × Units($21.00 × 2,900) $60,900 Less: Additional cost $8,300 Profit $52,600 Less split-off point sales($10 × 2,900) $29,000 Net increase $23,600