LanaTech Produces Three Products, X, Y, and Z, from Recycled

Short Answer

LanaTech produces three products, X, Y, and Z, from recycled paper. Budgeted data for next month follows: $$\begin{array} { l r r r } & \underline { \mathbf { X } } & \underline { \mathbf { Y } } & \underline { \mathbf { Z } } \\\text { Units produced } & 800 & 2,400 & 1,600 \\\hline \text { Sales value at split-off per unit } & \$ 6 & \$ 15 & \$ 12 \\\text { Additional processing costs per unit } & \$ 1 & \$ 4 & \$ 5 \\\text { Joint production costs per unit } & \$ 2 & \$ 6 & \$ 4 \\\text { Sales value if processed further per unit } & \$ 9 & \$ 20 & \$ 16\end{array}$$ The joint cost of the recycled paper is $110,000. Which of the products should be produced beyond the split-off point? $\begin{array}{llll}&X&Y&Z\\\text { A. } & \text { No } & \text { Yes } & \text { Yes } \\\text { B. } & \text { Yes } & \text { Yes } & \text { No } \\\text { C. } & \text { No } & \text { No } & \text { No } \\\text { D. } & \text { No } & \text { Yes } & \text { No }\end{array}$