Question
Bostitch Inc. manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $75,000 per
Bostitch Inc. manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $75,000 per quarter. The company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows:
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Product | Selling Price | Quarterly Output | |||||||||||
A | $ | 4 | per pound |
| 10,000 | pounds | |||||||
B | $ | 7 | per pound |
| 22,000 | pounds | |||||||
C | $ | 11 | per gallon |
| 5,000 | gallons | |||||||
Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: | |||||||||||||
Product | Additional Processing Costs | Selling Price |
| ||||||||||
A | $ | 53,000 |
| $ | 7 | per pound |
| ||||||
B | $ | 38,000 |
| $ | 12 | per pound |
| ||||||
C | $ | 18,000 |
| $ | 18 | per gallon |
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| |||||||||||||
Which products should be processed further?
- -A and B
-
-B and C
-
-A and C
-
-A, B, and C
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