Question
Mickey Company manufactures three joint products: X, Y, and Z. The cost of the joint process is $30,000. Information about the three products follows: X
Mickey Company manufactures three joint products: X, Y, and Z. The cost of the joint process is $30,000. Information about the three products follows:
| X | Y | Z |
Anticipated production | 5,600 lbs. | 10,000 lbs. | 2,500 lbs. |
Selling price/lb. at split-off | $2.00 | $1.00 | $3.00 |
Additional processing costs/lb. after split-off |
|
|
|
(all variable) | $1.50 | $1.25 | $.75 |
Selling price/lb. after further processing | $2.50 | $3.75 | $6.25 |
Allocated joint costs | $12,000 | $10,500 | $7,500 |
Required:
A. | Determine whether each product should be sold at split-off or processed further. |
B. | Determine the firm's income if the firm processed all three products beyond split-off. Should they do this? Explain your answer. |
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