Question
Question 9.2 (Total: 20 marks) Guasman Company produces products R, J, and C from a joint production process. Each product may be sold at the
Question 9.2 (Total: 20 marks)
Guasman Company produces products R, J, and C from a joint production process. Each product may be sold at the split-off point or be processed further. Joint production costs of $92,000 per year are allocated to the products based on the relative number of units produced. Data for Guasman's operations for the current year are as follows:
Units | Allocated Joint | Sales Value | |
Product | Produced | Production Cost | At Split-off |
R | 8,000 | $32,000 | $76,000 |
J | 10,000 | 40,000 | 71,000 |
C | 5,000 | 20,000 | 48,000 |
Product R can be processed beyond the split-off point for an additional cost of $26,000 and can then be sold for $105,000. Product J can be processed beyond the split-off point for an additional cost of $38,000 and can then be sold for $117,000. Product C can be processed beyond the split-off point for an additional cost of $12,000 and can then be sold for $57,000.
Required:
- Which products should be processed beyond the split-off point?
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