Question
ABC Corporation manufactures three products from a joint process. The three products are in industrial-grade form at the split-off point. They can either be sold
ABC Corporation manufactures three products from a joint process. The three products are in industrial-grade form at the split-off point.
They can either be sold at that point or processed further into premium grade. Costs related to each batch of this process are as follows:
Product A product B Product C
Sales price at split off point $16 $12 $5
Allocated joint costs $6,000 $6,000 $6,000
Sales Price after further processing $20 $18 $14
Cost of Further processing $6,830 $2590 $2110
Product Quantity 1000lb 1000lb 1000lb
What would be the additional amount of profit that ABC corporation would gain from further processing the product that is more profitable to process further rather then be sold at the split off point?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started