Homework Answers
Selling price of split off point = $2.70
Selling price after processing further = $5.10
Increase in selling price = Selling price after processing further - Selling price of split off point
= 5.10 - 2.70
= $2.40
Increase in sales revenue = Number of units x Increase in selling price
= 1,700 x 2.40
= $4,080
Cost of processing further = $2,400
Increase in operating income = Increase in sales revenue - Cost of processing further
= 4,080 - 2,400
= 1,680
Correct option is (A)
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