Question
From a particular joint process, Sky company produces three products, A, B, and C. Each product may be sold at the point of split-off or
From a particular joint process, Sky company produces three products, A, B, and C. Each product may be sold at the point of split-off or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. In2011, all three products were processed beyond split-off. Joint production costs for the year were $85,000. Sales values and costs needed to evaluate Sky's 2011 production policy follow.
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| Additional Costs and Sales | ||
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| Values If Processed Further | ||
| Units | Net Realizable Values | Sales | Added | ||
Product | Produced | (Sales Values) at Split-off | Values | Costs | ||
A | 4,000 | $28,000 | $42,000 | $20,000 | ||
B | 11,000 | 42,000 | 52,000 | 11,000 | ||
C | 10,000 |
| 23,000 |
| 34,000 | 6,000 |
For units of C, the unit production cost most relevant to a sell-or-process-further decision is (Round your answer to the nearest whole dollar.)
A.$ 7
B.$ 9
C.$ 2
D.$ 1
To maximize profits, Sky should subject the following products to additional processing:
A. A only
B. A, B, and C
C. B and C only.
D. C only
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