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A company uses a joint process to produce three products: A, B and C, all derived from one input. The company can sell these products
A company uses a joint process to produce three products: A, B and C, all derived from one input. The company can sell these products at the point of split-off or process them further. The joint production costs during October were $10,000. The company allocates joint costs to the products in proportion to the relative physical volume of output. Additional information is presented below. Unit Sales If Processed Further Unit Units Product Produced Price at Split-off Unit Sales Additional Price Cost A 1,000 $4.00 $5.00 $0.75 B 2,000 2.25 4.00 1.20 1,500 3.00 3.75 0.90 Assuming sufficient demand exists, to maximize profits, the company should sell product C at split-off and perform additional processing on products A and B. product B at split-off and perform additional processing on products C and A. product A at split-off and perform additional processing on products B and C. products A, B, and C at split-off
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