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What is the difference in operating income between processing the cat bowls further versus selling them off at the split-off point?

Respuesta :

Parrain

Answer: -$1,920

Explanation:

Operating Income if processed further would be;

= (Sales * Price) - Incremental Cost

= (1,000 * $14) - 4,920

= 14,000 - 4,920

= $9,080

Operating Income if sold off at split-off point;

= Sales * Price

= 1,000 * $11

= $11,000

Difference

= Processed Further - Sold at split-off

= 9,080 - 11,000

= -$1,920

Difference would be an Operating (loss) of $1,920.

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