Omega Company manufactures three chemicals in a joint process. The manufacturing costs of the joint process include $25,000 of direct materials and $35,000 of conversion costs. All three chemicals can be sold in their unrefined form immediately after the split-off point, or they can be further refined before they are sold. During May, all three chemicals were further refined. The following table shows data regarding production for the month of May:

Now assume that Omega Company uses the physical measures method, that the refining process for chemical C also produces a hazardous by-product that must be disposed of at a cost of $5/L, and that refining 1,000 L of chemical C results in 100 L of this by-product. For the month of May, what effect would refining chemical C have on Omega Company€™s profits as compared with its profits if chemical C was sold at split-off without being further refined (rounded to the nearest $100)?

a. $17,100 more profits by refining

b. $20,300 less profits by refining

c. $8,100 more profits by refining

d. $5,100 more profits by refining

e. $8,400 less profits by refining

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Chemical A B C $20 $25 $10 Sales price per litre before refining $35 $40 $18 Sales price per litre after refining Cost of refining $28,000 $10,000 $12,000 Total output of chemical at split-off 2,500 L 1,600 L 3,000 L Total output of chemical 2,300 L after refining 1,500 L 2,700 L