(Sell or process further) New England Weavers produces three products (precut fabrics for hats, shirts, and pants) from a joint process. Joint cost is allocated on the basis of relative sales value at split-off. Rather than sell the products at split- off, the company has the option to complete each of the products. Information related to these products is shown below:

a. What amount of joint cost should be allocated to the shirts and pants products?

b. What are the sales values at split-off for hats and shirts?

c. Which products should be processed further? Show computations.

d. If 4,000 shirts are processed further and sold for $67,000, what is gross profit on the sale?LO1

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HATS SHIRTS PANTS TOTAL Joint cost allocated Number of units produced Sales values at split-off point 5,000 8,000 3,000 16,000 $ 87,000 P P $180,000 ? P $ 40,000 $300,000 Additional costs of processing further $ 13,000 $ 10,000 $ 39,000 $ 62,000 Sales, values after all processing $150,000 $134,000 $105,000 $389,000