Pet Products Inc. manufactures two products, cat bowls and dog bowls, from a joint process. Cat bowls are allocated 50% of the total joint costs of $20,000. There are 1,000 cat bowls produced and 1,000 dog bowls produced each year. Cat Bowls can be sold at the split-off point for $12 per unit, or they can be processed further into an extra fancy cat bowl for additional processing costs of $4,947 and sold for $15 each.
What is the difference in operating income between processing the cat bowls further versus selling them off at the split-off point?
If income is higher by processing the cat bowls further, input your number as a positive number.
If income is lower by processing the cat bowls further, input your number as a negative number.