Question
Lafayette Company manufactures two products out of a joint process: Compod and Ultrasene. The joint costs incurred are $930,000 for a standard production run that
Lafayette Company manufactures two products out of a joint process: Compod and Ultrasene. The joint costs incurred are $930,000 for a standard production run that generates 138,000 gallons of Compod and 98,000 gallons of Ultrasene. Compod sells for $15.00 per gallon while Ultrasene sells for $14.25 per gallon.
6.Assume the same data as given in parts 3 and 4. The industrial chemical industry has experienced a downturn, which has left Lafayette with idle capacity. Suppose Lafayette can sell only half of the Compod made in each production run, but the remainder could be sold as Compodalene.
- Calculate the contribution per unit that Compodalene makes towards covering the joint production cost, fixed costs, and profit.
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