Cadallia Company harvests and processes almonds into three products: candied almonds, almond butter, and almond...
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Accounting
Cadallia Company harvests and processes almonds into three products: candied almonds, almond butter, and almond flour. The joint production cost for harvesting one ton of almonds is $500. The selling price of the Cadallias three products are as follows:
Candied almonds: $1.00 per pound
Almond butter: $5.00 per 40-pound bag
Almond flour: $14 per ton
A new investor in Cadallia Company thinks that the company is losing money whenever it sells almond flour and has called for dropping this product from the product line. The controller of Cadallia Company has calculated that the extra processing cost (beyond the joint production costs) for almond flour is $18 per ton. Cadallia Company is currently selling 1,000 tons of almond flour per year.
How much would Cadallia Companys net income change if it were to stop selling almond flour?
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