Texco Company manufactures three products, R, S, and T, from a particular joint process.

Each product may be sold at split-off or may be processed further. Joint production costs for the period were $412,500. All costs of additional processing are of a variable nature and are directly traceable to the products involved. The following data are from company records:

Required:

a. Using the gross market value method, distribute joint cost to the joint products.

b. Using the quantity method, determine the joint costs to allocate to each group of joint products.

c. If management instead assigns weights of 3:1:2 to products R, S, and T respectively based on the engineering skills required, what is the joint cost allocation and the cost per actual unit produced?

d. What is the unit cost for each product group that is most relevant to a sell or process further decision?

e. Recommend which product(s) should be additionally processed to maximize net contribution to profits. Support your recommendation with a cost analysis.

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Total Sales Sales Value Units Joint Product Produced Value at Split-off Separable after Further Costs Processing RST 25,000 $550,000 $67,500 $590,000 15,000 300,000 24,000 340,000 10,000 150,000 32,000 210,000