Figure 13-6

Multiple Choice

Figure 13-6. 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.
Refer to Figure 13-6.Should Autry process dac further?

A) No,income will be $1,500 lower.
B) No,income will be $5,000 lower.
C) Yes,income will be $1,500 higher.
D) Yes,income will be $5,000 higher.
E) It doesn't matter; income will be the same.