Question
Chen minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Larco, Marco and Narco. Each
Chen minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Larco, Marco and Narco. Each of these materials can be sold as is, or processed further and sold for a higher price. The company incurs joint costs of 180,000$ to process one batch of the raw material that produces the three products. The following cost and sales information available for one batch of each product
Sales value at Split-Off point | Allocated Joint Costs | Cost to Process Further | Sales Value of Processed Product | |
Larco | $200,000 | $40,000 | $100,000 | 330,000 |
Marco | 300,000 | 60,000 | 125,000 | 400,000 |
Narco | 400,000 | 80,000 | 150,000 | 600,000 |
Determine whether each of the three joint products should be sold as is or processed further
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