2 (10 points) GH Ltd. manufactures three main products from a common input in a joint processing operation. Joint processing costs up to the split-off point are as follows: Direct materials Direct labour Supervisor's salary Security Custodian salaries Utilities $75,000 90,000 75.000 25,000 20,000 15,000 The company allocates these costs to the joint products on-the-basis of their total sales at the split-off point. Each of the products may be sold at the split-off point or processed further. The additional processing costs and sales value after further processing for each product, on an annual basis, are: Product Sales Value at Split- Further Processing Sales Value After off 1030 1060 2010 Costs $150,000 $ 75,000 $100,000 $ 95,000 $ 50,000 $ 85,000 Further Processing $230,000 $180,000 $160,000 The "Further Processing Costs" consist of variable and avoidable fixed costs. Required: $ 74 #3 % 85 MacBook Pro F D T 96 6 87 & 7 > * 8 Required: a) Which product or products should be sold at the spilt-off point, and which product or products should be processed further? Show computations. b) F18 is a minor by-product of the above process and is not included in the above calculations. It is sold after minor further processing. The following information has been provided: Sales $6,000 Variable costs 1,000 Traceable fixed costs 3,000 Common fixed costs 5,000 Operating loss ($3,000) What would happen to GH Ltd.'s operating income if F18 was scrapped at no cost at the split-off point rather than processed further? Should GH Ltd. process F18 further? D- Format BIU # $ 3 4 IIII 12 H 85 MacBook Pro 96 6 5 e & 87 8