Phillippe Inc

Multiple Choice

Phillippe Inc. manufactures A and B from a joint process (cost = $80,000) . Five thousand pounds of A can be sold at split-off for $20 per pound or processed further at an additional cost of $20,000 and then sold for $25 per pound. If Phillippe decides to process A beyond the split-off point, operating income will:

A) increase by $10,000.
B) increase by $20,000.
C) decrease by $10,000.
D) decrease by $20,000.
E) increase by $5,000.