Question
Joint processing costs up to the split-off point total $325,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products
Joint processing costs up to the split-off point total $325,000 per quarter. For financial reporting purposes, 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 | $15 per pound | 12,000 pounds |
B | $9 per pound | 18,800 pounds |
C | $12 per gallon | 3,200 gallons |
Each product can be processed further after the split-off point. The additional processing costs per quarter and unit sellig prices after further processing are given below:
Product | Additional processing costs | Selling price |
A | $59,100 | $19.60 per pound |
B | 84,230 | 14.60 per pound |
C | 33,280 | 28.60 per gallon |
1. What if the financial advantage (disadvantage) of further processing each of the three product beyond the split-off point?
2. Bases on your analysis in requirement 1, which product or products should be sold at the split off point and which product or products should be process further?
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