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Assume a company has three productsA, B, and Cthat emerge from a joint process. The selling prices and outputs for each product at the split-off
Assume a company has three productsA, B, and Cthat emerge from a joint process. The selling prices and outputs for each product at the split-off point are as follows:
Product | Selling Price | Output | ||||||||
A | $ | 33 | per pound | 14,000 | pounds | |||||
B | $ | 29 | per pound | 18,000 | pounds | |||||
C | $ | 24 | per pound | 19,000 | pounds | |||||
Each product can be processed further beyond the split-off point. The additional processing costs for each product and their respective selling prices after further processing are as follows:
Product | Additional Processing Costs | Selling Price | ||||||||||
A | $ | 67,000 | $ | 37 | per pound | |||||||
B | $ | 72,500 | $ | 34 | per pound | |||||||
C | $ | 88,000 | $ | 30 | per pound | |||||||
What is financial advantage (disadvantage) of further processing if the company decides to further process all three products?
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