Question
out division IV. 4P7.41A (LO 4) A company manufactures three products using the same production process. The costs incurred up to the split-off point
out division IV. 4P7.41A (LO 4) A company manufactures three products using the same production process. The costs incurred up to the split-off point are $200,000. These costs are allocated to the products on the basis of their sales value at the split-off point. The number of units produced, the selling prices per unit of the three products at the split-off point and after further processing, and the additional processing costs are as follows: Product Number of Units Produced Selling Price at Split-Off Selling Price after Processing A 3,000 $10.00 $15.00 B 6,000 11.60 16.20 C 2,000 19.40 21.60 I Additional Processing Costs $14,000 16,000 9,000 Instructions a. Determine which information is relevant to the decision on whether to process the products further. Explain why this information is relevant. b. Which product(s) should the company process further and which should it sell at the split-off point? c. Would your decision be different if the company was using the quantity of output to allocate joint costs? Explain.
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