Joint product decision analysis Del-Mar Company manufactures chemical products in joint production processes. Kolon-G, used in food processing, is one of three products produced in a joint production process. Kolon-G currently sells for $18 per gallon. The cost of Kolon-G using the physical units joint cost allocation method is $15, of which $6 is cost after split-off. The product's unit cost is $13 using the sales value joint cost allocation method. The chemical could be sold at the split-off point for $12 and 80 percent of the product's cost after split-off could be eliminated.

Transcribed Image Text:

REQUIRED a. Should the product be sold at the split-off point? b. The marketing manager is concerned about a competitor's new product that may require a price reduction for Kolon-G. If the firm has to lower the selling price of Kolon-G to $11 per gallon, should the firm continue to produce and market the product? Assume the product is processed after split-off.