The Freed Corporation produces three products, X, Y, Z, from a single raw material input. Product Y can be sold at the split-off point for total annual revenues of $50,000, or it can be processed further at a total annual cost of $16,000 and then sold for $68,000. Which of the following statements is true concerning Product Y?
A. The annual financial advantage from processing Product Y further is $18,000.
B. Product Y should be sold at the split-off point rather than processed further.
C. The annual financial advantage from processing Product Y further is $2,000.
D. The annual financial advantage from processing Product Y further is $68,000.
Answer: C
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What will be an ideal response?
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