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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. If Processed Further Product Units Produced Unit Sales Price at Split-off Unit Sales Unit Additional Price Cost A 1,000 $4.00 $5.00 $0.75 B 2,000 2.25 4.00 1.20 C 1,500 3.00 3.75 0.90 Assuming sufficient demand exists, to maximize profits, the company should sell Assuming sufficient demand exists, to maximize profits, the company should sell Multiple Choice O 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 13
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