(a)

Highlight the correct answers for the following questions. Each question carries

Products A, B & C are produced from single raw material input. The raw material costs are $90,000 from which 5,000 units of A, 10,000 units of B and 15,000 units of C can be produced each period. ProductA can be sold at the split off point for $2/unit, or it can be processed further at a cost of $12,500 & then sold for $5/unit What is the correct course of action regading Product A?

1. It should be sold at the split-off point, since further processing would result in a loss of .50/unit
2. It should be processed further, since this will increase profits by $2,500 each period
3. It should be sold at the split-off point, since further processing will result in a loss of $2,500 each period
4. It should be processed further, since this will increase proifts by $12,500 each period

1b) Whatis a joint product?

1. Any product that consists of several parts
2. Any product produced by a firm with more that one product line
3. Any product involved in a make or buy decision
4. One of several proucts from a common input

1c) The Lantern Corp has 1,000 obsolete lanterns that are carried in Inventory with a mg cost of

$20,000. If the lanterns are re-machined for $5,000, they could be sold for $9,000

Alternatively the lanterns could be sold for scrap for $1,000 Which alternative is more desirable.

& what are the total relevant costs for that alternative?

1. Re-machine & $5,000
2. Re-machine & $25.000
3. Scrap & $20,000
4. Scrap & $19.000

1d) Deciding what to do with a product from the split-off point forward is known as a

A) Joint Cost Analysis

B)Gross Margin Analysis

C) Sell or Process further decision

D) CVP Analysis

1e) An example of an Industry where a # of end products are produced from a single raw material input

1. Publishing
2. Petroleum refining
3. Hospitality

1. Furniture

B) WP Company produces products X,Y & Z from a single raw material input in a joint production process.

Budgeted data for the next month is as follows:

C) Benjamin Signal Co produces products R,J & C from a joint production process. Each product may be sold at the split-off pint or be processed further. Joint product costs of $92,000 per year are allocated to the products based on the relative # of units produced. Data is shown below:

Required: Which products) should be processed beyond the split-oft

Show your calculations

Answer below:

The cost of the joint raw material input is $149,000. Which of the products should be processed beyond the split-off pint? (Show Calculations.) Product R can be processed beyond the split-off point for an additional cost of $26,000 \& can then be sold for $105,000 Product J can be proecessed beyond the split-off point for an additional cost of $38,000 \& can then be sold for $117,000 Product C can be processed beyond the sipit-off point for an additional $12,000& can then be sold for $57,000