Mandarin Furniture manufactures two products, pillows and cushions from the joint process....
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Mandarin Furniture manufactures two products, pillows and cushions from the joint process. Pillows are allocated $7,000 of the total joint costs of $25,000. There are 2,500 pillows produced and $2500 cushions produced each year. Pillows can be sold at the split-off for $12 per unit, or they can be processed further into a deluxe pillow for additional processing costs of $8000 and sold for $16 for each deluxe pillow.
If the pillows are processed further and made into deluxe pillows, the effect on operating income would be?
Process costing
The technique of costing in which the item has been produced by going through number of processes is referred to as process costing. It is applied by those manufacturing firms who are engaged in production of bulky items.
Answer and Explanation: 1
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View this answerThe effect on operating income is concluded as follows:
{eq}\begin{align*} {\rm\text{Profit before processing}} &= \left( {{\rm\text{Number of...
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