Question
Marlin Manufacturing makes three products from a common input in a joint processing operation. Unit selling prices and total output at the split-off point are
Marlin Manufacturing makes three products from a common input in a joint processing operation. Unit selling prices and total output at the split-off point are as follows:
Product | |||
A | B | C | |
Selling Price per unit | 18.00 | 10.00 | 28.00 |
Quarterly Output (units) | 16,000.00 | 22,000.00 | 5,500.00 |
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 | |||
A | B | C | |
Additional Processing Costs | 68,000.00 | 100,000.00 | 39,000.00 |
Sales price after processing | 22.00 | 16.00 | 36.00 |
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1. What are the incremental revenues from further processing for Product A?
2. What is the financial advantage (disadvantage) of processing Product A further? (In other words, what's the additional net income)
3. What are the incremental revenues from further processing for Product B?
4. What is the financial advantage (disadvantage) of processing Product B further? (In other words, what's the additional net income)
5. What are the incremental revenues from further processing for Product C?
6. What is the financial advantage (disadvantage) of processing Product C further? (In other words, what's the additional net income)
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