Question - A joint production process at Sunny Brooks Dairy results in two products, cherry jelly and cherry jam. The following cost and activity data relate to these two products:
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Cherry jelly
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Cherry jam
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Joint costs allocated
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$10,000
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$12,000
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Number of units produced from joint process
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2,000
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2,000
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Selling price at split-off point
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$2.50
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$1.75
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Selling price after processing further
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$5.00
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$2.00
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Cost of processing further
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$2,200
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$2,000
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Cherry jelly can be sold as - is (at the split - off point) for $2.50 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) $5,000 net increase in operating income
B) $2,800 net decrease in operating income
C) $5,000 net decrease in operating income
D) $2,800 net increase in operating income