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Gusler company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $98,000 per

Gusler company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $98,000 per quarter. The company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows:

Product

Selling Price

Quarterly Output

A

$

3

per pound

10,000

pounds

B

$

6

per pound

22,000

pounds

C

$

13

per gallon

5,000

gallons

Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below:

Product

Additional

Processing Costs

Selling Price

A

$

53,000

$

6

per pound

B

$

38,000

$

12

per pound

C

$

18,000

$

19

per gallon

Which products should be processed further?

Multiple Choice

  • B and C
  • A and B
  • A and C
  • A, B, and C

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