1. Dock Corporation makes two products from a common input. Joint processing costs up to the split-off point total $33,600 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below:

	Product X		Product Y		Total
Allocated joint processing costs		16,800		16,800		33,600
Sales value at split-off point	$	24,000	$	24,000	$	48,000
Costs of further processing	$	15,000	$	18,700	$	33,700
Sales value after further processing	$	35,500	$	45,100	$	80,600

What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?

Multiple Choice

• $31,800

• $20,500

• $16,800

• $35,500

2. Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $24,000 and will have a 6-year useful life and a $6,000 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $28,000 per year. The cost of these prescriptions to the pharmacy will be about $22,000 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to (Ignore income taxes.):

Multiple Choice

• 2 years

• 1.8 years

• 4 years

• 1.2 years