Question
3.) Sweet Mandarines processes different types of mandarines. The most common raw material that it processes results in three joint products: Larco, Marco, and Narco.
3.) Sweet Mandarines processes different types of mandarines. The most common raw
material that it processes results in three joint products: Larco, Marco, and Narco. Each
of these products can be sold as is, or each can be processed further and sold for a higher
price. The company incurs joint costs of $180,000 to process one batch of the raw material
that produces the three joint products. The following cost and sales information is available
for one batch of each product.
| Sales Value at Split-Off point | Allocated Joint Costs | Cost to Process Further | Sales Value of Processed Product |
Larco | $200,000 | $40,000 | $110,000 | $330,000
|
Marco | 300,000 | 60,000 | 75,000 | 400,000
|
Narco | 400,000 | 80,000 | 250,000 | 600,000 |
Determine whether each of the three joint products should be sold as is, or processed further.
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