FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Autry Company manufactures veterinary products. One joint process involves refining a chemical (dactylyte) into two chemicals: dac and tyl. One batch of 5,000 gallons of dactylyte can be converted to 2,000 gallonsof dac and 3,000 gallons of tyl at a total joint processing cost of $12,000. At the split-off point, dac can be sold for $3 per gallon and tyl can be sold for $4 per gallon.Autry has just learned about a new process to convert dac into prodac. The new process costs $4,000 and yields 1,700 gallons of prodac for every 2,000 gallons of dac. Prodac sells for $5 per gallon.

Should Autry process dac further?

a.
No, income will decrease by $1,500.
b.
No, income will decrease by $5,000.
c.
Yes, income will increase by $1,500.
d.
Yes, income will increase by $5,000.
e.
It doesn't matter; income will be the same.
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