A company manufactures three products using the same production process. The costs incurred up to the split-off
Question:
A company manufactures three products using the same production process. The costs incurred up to the split-off point are $191,900. These costs are allocated to the products on the basis of their sales value at the split-off point. The number of units produced, the selling prices per unit of the three products at the split-off point and after further processing, and the additional processing costs are as follows.
Product | Number of Units Produced | Selling Price at Split-Off | Selling Price after Processing | Additional Processing Costs |
D | 4,570 | $10.05 | $14.73 | $15,347 |
E | 5,690 | 11.80 | 16.28 | 17,731 |
F | 1,790 | 19.11 | 22.84 | 10,177 |
(b1)
Determine the incremental profit (loss) of each product(s). (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Product D | Product E | Product F | |
Incremental profit (loss) | $ | $ | $ |
(b2)
Which product(s) should be processed further and which should be sold at the split-off point?
Product D |
Product E |
Product F |
|
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones