E7.24 (LO 4) Shynee Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Sarco, Barco, and Larco. Each of these products can be sold as is, or they can be 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 joint products. The following cost and selling price information is available for one batch of each product:

		Selling Price at Split-Off Point		Allocated Joint Costs		Cost to Process Further		Selling Price of Processed Product
Sarco		$200,000		$40,000		$100,000		$310,000
Barco		300,000		60,000		89,000		380,000
Larco		500,000		80,000		250,000		800,000

Instructions

Determine whether each of the three joint products should be sold as is, or processed further.

Prepare an incremental analysis for the decision to retain or replace equipment.