Autry Company manufactures veterinary products. One joint process involves refining a chemical (dactylyte) into two chemicals
Question:
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 gallons of 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 of 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?
Yes, income will be $1,500 higher.
Yes, income will be $5,000 higher.
No, income will be $5,000 lower.
It doesn't matter; income will be the same.
No, income will be $1,500 lower.
Mathematical Applications for the Management Life and Social Sciences
ISBN: 978-1305108042
11th edition
Authors: Ronald J. Harshbarger, James J. Reynolds