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A company manufactures three products using the same production process. The costs incurred up to the split-off point are $200,000. These costs are allocated to
A company manufactures three products using the same production process. The costs incurred up to the split-off point are $200,000. 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. Prepare incremental analysis for whether to sell or process materials further. Product D E Number of Units Produced 4,000 6,000 2,000 Selling Price at Split-Off $10.00 11.60 19.40 Selling Price after Processing $15.00 16.20 22.60 Additional Processing Costs $14,000 20,000 9,000 F Instructions a. Which information is relevant to the decision on whether or not to process the products further? Explain why this information is relevant. b. Which product(s) should be processed further and which should be sold at the split-off point? c. Would your decision be different if the company was using the quantity of output to allocate joint costs? Explain
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