Beta Electronics Ltd.

Scenario: Joint Cost Allocation and Decision Making

Product Details:

• Product A:
  • Sales Revenue: $200,000
  • Separate Costs after Split-off: $150,000
  • Joint Costs: $50,000

• Product B:
  • Sales Revenue: $300,000
  • Separate Costs after Split-off: $200,000
  • Joint Costs: $50,000

Requirements:

1. Joint Cost Allocation:
   • Allocate joint costs to Product A and Product B using the sales value at split-off method. Present your calculations in a table format showing the allocated costs for each product.

1. Profitability Analysis:
   • Calculate the net income for Product A and Product B after considering the allocated joint costs. Prepare an income statement format table showing the revenue, costs, and net income for each product.

1. Incremental Analysis:
   • Beta Electronics Ltd. is considering investing in additional processing of Product A to increase its selling price by 20%. Perform an incremental analysis to determine whether this investment is financially justified.

1. Joint Products Decision:
   • Analyze whether Beta Electronics Ltd. should continue producing both Product A and Product B based on their profitability and the allocated joint costs. Provide a recommendation supported by quantitative analysis.

1. Strategic Cost Allocation Strategy:
   • Propose a strategic cost allocation strategy for Beta Electronics Ltd. that enhances transparency and accuracy in joint cost allocation. Discuss the benefits of adopting this strategy for decision-making.