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Company X process materials extracted from mines. The most common raw material that it processes results in three joint products; Product A, Product B and
- Company X process materials extracted from mines. The most common raw material that it processes results in three joint products; Product A, Product B and Product C. Each of these products can be sold as is, or each can be processed further and sold for a higher price. The company incurs joint costs of TL180,000 to process one batch of the raw material that produces the three joint products. Company allocates joint costs to products based on tonnage of the product. The following cost and sales information is available for one batch of each product:
Item | Product A
| Product B | Product C |
Sales Value at Split-Off | 270,000 | 300,000 | 465,000 |
Allocated Joint Costs | 40,000 | 60,000 | 80,000 |
Costs to Process Further | 110,000 | 83,000 | 250,000 |
Sales Value after Process | 306,000 | 400,000 | 770,000 |
Determine total net income after deciding which products should be sold at the split-off point and which should be processed further using incremental analysis.
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