cornerstones 3rd eddition by Hansen, Don R

#6

Akaramasa, Inc., uses a joint process to produce Products W, X, Y, Z. Each product may be sold at its split-off point or processed further. Additional processing costs of specific products are entirely variable. Joint processing costs for a single batch of joint products are $200,000. Other relevant data are as following:

sales value additional Sales value of

product at split-off Processing Cost final product

W $40,000 $24,000 $70,000

X 16,000 10,000 20,000

Y 20,000 10,000 48,000

Z 24,000 16,000 36,000

$100,000 $60,000 $174,000

Required:

a. Determine which products should be processed further.

b. How will processing each product further affect profits?

Thank you in advance for your help.