1.

Assume a company has three productsA, B, and Cthat emerge from a joint process. The selling prices and outputs for each product at the split-off point are as follows:

Product	Selling Price		Output
A	$ 33	per pound	14,000	pounds
B	$ 29	per pound	18,000	pounds
C	$ 24	per pound	19,000	pounds

Each product can be processed further beyond the split-off point. The additional processing costs for each product and their respective selling prices after further processing are as follows:

Product	Additional Processing Costs	Selling Price
A	$ 64,000	$ 37	per pound
B	$ 71,000	$ 34	per pound
C	$ 88,000	$ 30	per pound

2.

Assume a company is considering buying 10,000 units of a component part rather than making them. A supplier has agreed to sell the company 10,000 units for a price of $41.00 per unit. The companys accounting system reports the following costs of making the part:

	Per Unit	10,000 Units per Year
Direct materials	$ 16	$ 160,000
Direct labor	12	120,000
Variable manufacturing overhead	2	20,000
Fixed manufacturing overhead, traceable	8	80,000
Fixed manufacturing overhead, allocated	4	40,000
Total cost	$ 42	$ 420,000

One-half of the traceable fixed manufacturing overhead relates to supervisory salaries and the remainder relates to depreciation of equipment with no salvage value. If the company chooses to buy this component part from a supplier, then the supervisor who oversees its production would be discharged. What is the financial advantage (disadvantage) of buying 10,000 units from the supplier?

3. Assume that a company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company has gathered the following information:

Number of units to be produced and sold each year	15,000
Unit product cost	$ 30
Estimated annual selling and administrative expenses	$ 68,400
Estimated investment required by the company	$ 780,000
Desired return on investment (ROI)	12%

What is the markup percentage on absorption cost required to achieve the desired ROI?