Part IV $15$ Marks

Toyota Canada manufactures three main products from a common input in a joint processing operation. Joint processing costs up to the split$-$off point are as follows:

Direct materials$150,000$

Direct labour$180,000$

Supervisor's salary$150,000$

Security$50,000$

Custodian salaries$40,000$

Utilities$30,000$

The company allocates these costs to the joint products on$-$the$-$basis of their total sales at the split$-$off point. Each of the products may be sold at the split$-$off point or processed further. The additional processing costs and sales value after further processing for each product, on an annual basis, are:

$$Further$$Sales Value

$$Sales Value$$Processing$$After Further

Product$$at Split$-$off$$Costs$$Processing

Lexus $$$$150,000$$ $75,000$$$230,000$

Yaris $$$$100,000$$ $95,000$$$180,000$

Corolla $$$ $50,000$$ $85,000$$$160,000$

The $$Further Processing Costs$$ consist of variable and avoidable fixed costs.

Required:

Which product or products should be sold at the spilt$-$off point, and which product or products should be processed further? Show computations.