Salt Island Pottery Ltd

Multiple Choice

Salt Island Pottery Ltd.manufactures two products, bowls and plates, from a joint process.Bowls are allocated $5,000 of the total joint costs of $25,000.There are 1,500 bowls produced and 1,500 plates produced each year.Bowls can be sold at the split-off point for $12 per unit, or they can be processed further into a deluxe bowl for additional processing costs of $5,000 and sold for $16 for each deluxe bowl.By how much will operating income change if the company chooses to process deluxe bowls?

A) $1,000 net increase in operating income
B) $1,000 net decrease in operating income
C) $19,000 net increase in operating income
D) $14,000 net increase in operating income
E) $4,000 net decrease in operating income