A Joint Production Process at Specialty Jams Farm Results in Two

Multiple Choice

A joint production process at Specialty Jams Farm results in two products, cherry jelly and cherry jam. The following cost and activity data relate to these two products: Cherry jelly can be sold as-is (at the split-off point) for $2.70 per unit, or it can be processed further into a specialty cherry smoothie and then sold for $5.00 per unit. If cherry jelly is processed further into the specialty cherry smoothie, what would be the overall effect on operating income?

A) $2430 net decrease in operating income
B) $5670 net decrease in operating income
C) $5670 net increase in operating income
D) $2430 net increase in operating income